If the base is broad and
productive, more tax revenue is likely to be collected with low rates.
A regime of high tax
rates neither brings in more revenue nor improves prosperity levels. On the
contrary, the efficiency costs of high tax rates are huge.
Imam Ali (A.S.) is
perfectly right when he remarks that a ruler, who is interested only in revenue
collection and ignores issues such as fertility of soil and greater welfare of
its people, brings nothing but disaster.
People get frustrated
when they observe that huge sums are collected in taxes but at the same time,
there is inefficient provision of public goods and services. They revolt
against unjust and corrupt systems, sometimes peacefully through ballot boxes
and at other times violently.
Imam Ali (A.S.) also
speaks of heavy burden of taxation, and asks his officers to reduce their
burden as and when the situation warrants.
He writes to Malik
Ashtar:
“If taxpayers complain
to you about heavy incidence of taxation, of any accidental calamity, of
vagaries of monsoon, of scarcity and stoppage of the means of irrigation, of
floods or destruction of their crops on account of excessive rainfall and if
their complaints are true then reduce their taxes. This reduction should be
such that it provides them opportunities to improve their conditions and eases
their circumstances”.
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