Effectiveness of Rwandan Law of Tax Administration in addressing Tax Offences

CHAPTER I. An Overview of taxation

The Ruler should act like a bee which collects honey without causing pain to the plant^5(*).

I.1. A history of Taxation

For as long as governments have existed, they have had to come up with ways to finance their activities. Methods of public finance have changed enormously over time.

I.1.1 Ancient Times

In the ancient civilizations of Palestine, Egypt, Assyria, and Babylonia, individual property rights did not exist. The king was sole owner of everything in his domain, including the bodies of his subjects. Thus, instead of taxing individuals to support the government, the king could simply force them to work for him. Ancient kings earned income in the form of food from their lands and precious metals from their mines. If this income did not meet the king's demands, he might lead his armies into neighboring countries to confiscate their property. The conquered peoples might also be required to make payment (known as tribute) to the conqueror in acknowledgment of their submission to his power. If kings were not very wealthy or not very good at stealing from other countries, they would resort to taxing their own people. In societies that operated without money, the ruler taxed farmers by requiring that they turn over some proportion of their crops to the state. Poll taxes were a major source of revenue in Egypt under the Ptolemaic dynasty (323 bc-30 bc).

The government of ancient Athens, Greece, relied on publicly owned silver mines, tribute from conquered countries, a few customs duties, and voluntary contributions from citizens for revenue. It levied poll taxes only on slaves and aliens (non-citizens) and made failure to pay a capital crime^6(*).

I.1.2 Medieval Times7(*)

During the middle Ages, from about the 5th century ad to the 15th century, taxation varied from region to region. Europeans were subject to many forms of taxation, including land taxes, poll taxes, inheritance taxes, tolls (payments for the use of bridges, roads, or seaports), and miscellaneous fees and fines. Many people paid taxes in the form of money or crops directly to the local lord whose land they farmed.

Under the system of feudalism that dominated in Western Europe beginning in about the 11th century, kings, nobles, and church rulers all collected taxes. Kings derived income from their lands, from import and export duties, and from the various feudal dues and services owed by their vassals. For the most part, church officials and nobles were granted exemption from royal taxes, so the burden of taxation fell heavily on the peasantry. When King John of England tried to increase his income by a series of heavy scutages (payments that knights made in lieu of military service), the feudal nobility refused to pay. In 1215 they forced the king to sign the Magna Carta, a document in which he agreed to collect scutage only with the «common consent» of his barons--thus limiting the king's power to tax.

The Roman Catholic Church was a major tax collector during the middle Ages. One of the most important sources of church revenue was the tithe, a compulsory payment of one-tenth of a person's harvest and livestock. The church also collected various fees, fines, and tolls, and required clergy members, such as bishops and archbishops, to make payments to the papacy in Rome.

An important development toward the end of the feudal period was the dramatic growth in the number and population of towns and cities. These urban centres collected revenues using taxes on property as well as sales taxes on certain items.

* ⁵ Mahabharata, in Tax Law Design and drafting, Val. 1 Victor Thuronyi, IMF, 1966

* ⁶ http://encarta.msn.com/encyclopedia_761573037_6/Taxation.html#s40, 24/09/2008

* ⁷ http://encarta.msn.com/encyclopedia_761573037_7/Taxation.html, 24/09/2008