Continuation
In public borrowing, al-Ghazali (1058-1111) saw its
permissibility mainly under one condition.
So, when other regular sources of revenues of the state are
not adequate to meet expenditure on defence, etcetera government may go to public
borrowing.
Ibn Khaldun (1332-1404) provided positive analysis of the
effect of tax on work efforts.
According to him, work efforts will be affected by high taxes
resulting in a decrease in production and population (due to emigration).
It will eventually decrease tax revenue by decreasing the tax
base.
He argued for demand management policy in the form of:
ü taxes
ü and higher
government expenditure
during recession.
This idea is conventionally believed to come out of Keynes'
General Theory in about mid-20th century.
Used from paper of Abdul Ghafar
Ismail and Noraziah Che Arshad
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