This blog is written by Mr. Atiq Ur Rehman, Senior Manager International VAT Taxation Services. Please read this blog and provide us your valued comments.

THE HISTORY OF TAXATION

Lets be honest. Nowadays Most people hate death and taxes. However both are inevitable. The question arises when did taxes began in history. The taxes have been ever present since the time of ancient Egyptian civilization. The king used to collect goods as a form of tax on the basis of property held by a person (Common properties in those days were land, animals and slaves). This may be termed as a form of wealth tax.

The modern income tax was not conceived until the last two centuries. The reason for the same being no proper accounting and recoding mechanisms. However in the late 19th Century and early 20th Century government felt a need to collect extra money from people to finance social works (in slogan but to finance wars in actual). If history is studied it reveals that whenever there is a war like situation the tax rates go up. The fact is evident if we go into the American, British, French and German history.

Zakat is a form of Islamic taxes and has been present since the inception of Islam. Zakat is type of wealth tax applicable on people holding certain level of wealth. The people below the threshold are exempted from zakat. The money collected from zakat cannot be utilized in general social work but was aimed at alleviating the poor and deprived part of society.

The tax on expatriates and non-residents was imposed by Hazrat Umar (R.A) in a very crude form where the state would provide them with protection and basic facilities against a tax called Jizya. The concept has been refined and utilized by many countries around the world in present days e.g.  in Saudi Arabia the local citizens (individuals, AOPs and Companies) should pay zakat whereas foreign persons (Individuals, AOPs and Companies) should pay income tax.

Whatever the history might be the taxes are nightmare to everyone and no one likes to pays them. If you don’t believe my words, the places on earth where there are no taxes are called “Tax HEAVENS”. These words are not used for any other item of the society. The taxes in modern days are a necessary evil and a state’s tool to control the economics and finance of a county.

Atiq ur Rehman