Kautilya

Adam Smith

Benefit-rule of taxation

(p. 820) “When there was no order in society and only the law of the jungle prevailed, people [were unhappy and being desirous of order] made Manu, the son of Vivasvat, their king; and they assigned to the king one-sixth part of the grains grown by them, one-tenth of other commodities and money. The king then used these to safeguard the welfare of his subjects.”

(Bk. V, Ch. II, p. 350) “The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; That is, in proportion to the revenue which they respectively enjoy under the protection of the state.

Certainty of tax

Income tax rate was proportional and equal to one-sixth of income and was fixed by the tax-payers.

“The tax which each individual is bound to pay ought to be certain, not arbitrary.”

Economy

p. 220: “A wise Chancellor is one who collects revenue so as to increase income and reduce expenditure. He will take remedial measures if income diminishes and expenditure increases (2.6.28).”

(p. 284) “He who produces double the [anticipated] revenue eats up the janapada [the countryside and its people, by leaving them inadequate resources for survival and future production] (2.9).” He (p. 181) suggested for the king, “He shall protect agriculture from being harassed by (onerous) fines, taxes and demands of labour (2.1).”

(p. 351) “Every tax ought to be so contrived as both to take out and to keep out of the pockets of the people as little as possible, over and above what it brings into the public treasury of the state.”

Convenience of payment

He (p. 253) observed, “Just as one plucks fruits from a garden as they ripen, so shall a king have the revenue collected as it becomes due. Just as one does not collect unripe fruits, he shall avoid taking wealth that is not due because that will make the people angry and spoil the very sources of revenue (5.2).”

(p. 351) “Every tax ought to be levied at the time, or in the manner, in which it is most likely to be convenient for the contributor to pay.”

Compliance

The Record Keepers were responsible for collecting the taxes and there were magistrates to “inspect their work and to ensure proper collection of taxes” (2.35).

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