DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - What Tax rate is Islamically appropriate for the modern Muslim nation state?

**LindaSmithXV** · 09-04-2012, 04:22 AM

We are not talking about oil rich countries or even a Islamic Union where a pledge that all natural resources belong to all Muslims not only to saudis or iranians or malaysians. However for the modern nation state currently we need to think out a tax system to save lives and reduce sufferings. Zakat by itself without wealth and resource distribution wont fulfill the needs. Only the concept that Zakat + wealth/resource belongs to all needy Muslims is the only solution to avoid taxation. Until then we have to tax well-off people or avoid that immoral act and let people die/suffer (another immoral act). Choose which one you prefer.

Interestingly, contrary to popular misconception the UAE economy has long since stopped being 'oil riches' and is now more reliant upon trade, other forms of business activity and tourism.

Its not just Zakaat that the Shariah establishes as revenues for an Islamic government its ....

These revenues that Shar'a has defined are:

Fa'i,

Jizya,

Kharaj,

Ushur,

and income from Public properties. in many countries these alone would be adequate to provide basic services.

this section was interesting;

Wealth Tax

Taxes are levied on the wealth of the Muslims which is in excess of their basic needs and their luxuries according to normal standards of living. Taxes are only collected from those who have surplus wealth and nothing is taken from those who have no surplus wealth. This is because the Messenger of Allah (saw) said: "The best Sadaqah is that given out of richness."

The richness here means what the person can afford after satisfying his needs.

It was narrated from Jabir that the Messenger of Allah (saw) said: "Start with yourself when giving Sadaqah. If there remains any excess, then to your family. If there remains any excess, then to your relatives. If there remains any excess, then do like this, give those in front of you and those to your right and those to your left." [Muslim]

He (saw) deferred the obligation of spending upon anyone else until after spending upon oneself. Taxes are similar to this as they are like financial maintenance and Sadaqah.

Allah (swt) says:

وَيَسْأَلُونَكَ مَاذَا يُنفِقُونَ قُلِ الْعَفْوَ

"They ask you what they should give: say, ‘Give what you can spare.'" [TMQ Al-Baqarah 2:219]

In other words, spending which causes no hardship and which is extra to one's needs. There is no concept of income tax in Islam as we find in western capitalist countries. Taxes are only levied on excess wealth and not on income.

The State is also not allowed to impose indirect taxes such as sales taxes on goods and services. Nor can it impose taxes in the form of court fees, fees on petitions forwarded to the State, sale or registration of land, buildings or measurements or other types of taxes other than those in the shar'iah. This is because imposing oppressive or illegal taxation is one of the prohibited injustices about which the Messenger of Allah (saw) said: "He who imposes maks (custom duty) would not enter paradise." [Ad-Darimi, Ahmed and Abu ‘Ubayd]

In western capitalist countries their taxation penalises the poor and vulnerable in society. Clever accounting and offshore Swiss bank accounts ensure the rich in western societies can avoid paying the majority of taxes altogether. In the UK for example, the Queen is one of the richest people in Britain yet she pays no income tax, whereas a poor single mother or an old age pensioner must pay income tax. With regressive taxes like the sales taxes on goods and services these hurt the poor more than the rich since the tax rates are the same for both.

Unfortunately, the Muslim governments today see adopting the western capitalist system as the only way to achieve economic progress. We therefore find the same oppressive taxation introduced into Muslim countries such as the General Sales Tax (GST) in Pakistan.

This is not to mention the endemic corruption where tax revenues are diverted from the State Treasury into the personal bank accounts of the rulers and other government officials.

Taxes in Islam are only collected to raise the amount necessary to cover the deficit in the obligatory expenditure of the Bait ul-Mal. When imposing taxation, no consideration is given to the notion of preventing the increase of wealth, or preventing richness or increasing the revenues of the Bait ul-Mal. Consideration is only given to fulfilling the required expenditure on the obligatory needs and interests on the State.

If any taxes are taken over and above the obligatory expenditure then this is considered a mazlama (injustice). The Court of Unjust Acts (mahkamat ul-mazalim) has the power to investigate any excessive taxation. If after the court's investigation the tax or tax-rate is deemed to indeed be a mazlama then the court can oblige the State to abolish or lower the tax and return any excess money to the Muslims.

Therefore, the shar'iah has resolved the problem of financing the expenditure on the Ummah's needs and interests in a 21st century Khilafah. These are good points.

One important one being to tax the excess riches of the rich (rather than a general income tax),

but only if there is a shortfall in the Bayt al Mal (treasury of the state)

and only for Islamically legitimate things,

not for vanity projects and unneeded things like much tax in the Western world is spent upon.

Hadhrat Umar (raa) considered doing that at one time I believe, and as we know he was rightly guided in his rule.

09-04-2012, 04:22 AM	#22
LindaSmithXV Join Date Oct 2005 Posts 466 Senior Member	We are not talking about oil rich countries or even a Islamic Union where a pledge that all natural resources belong to all Muslims not only to saudis or iranians or malaysians. However for the modern nation state currently we need to think out a tax system to save lives and reduce sufferings. Zakat by itself without wealth and resource distribution wont fulfill the needs. Only the concept that Zakat + wealth/resource belongs to all needy Muslims is the only solution to avoid taxation. Until then we have to tax well-off people or avoid that immoral act and let people die/suffer (another immoral act). Choose which one you prefer. Interestingly, contrary to popular misconception the UAE economy has long since stopped being 'oil riches' and is now more reliant upon trade, other forms of business activity and tourism. Its not just Zakaat that the Shariah establishes as revenues for an Islamic government its .... These revenues that Shar'a has defined are: Fa'i, Jizya, Kharaj, Ushur, and income from Public properties. in many countries these alone would be adequate to provide basic services. this section was interesting; Wealth Tax Taxes are levied on the wealth of the Muslims which is in excess of their basic needs and their luxuries according to normal standards of living. Taxes are only collected from those who have surplus wealth and nothing is taken from those who have no surplus wealth. This is because the Messenger of Allah (saw) said: "The best Sadaqah is that given out of richness." The richness here means what the person can afford after satisfying his needs. It was narrated from Jabir that the Messenger of Allah (saw) said: "Start with yourself when giving Sadaqah. If there remains any excess, then to your family. If there remains any excess, then to your relatives. If there remains any excess, then do like this, give those in front of you and those to your right and those to your left." [Muslim] He (saw) deferred the obligation of spending upon anyone else until after spending upon oneself. Taxes are similar to this as they are like financial maintenance and Sadaqah. Allah (swt) says: وَيَسْأَلُونَكَ مَاذَا يُنفِقُونَ قُلِ الْعَفْوَ "They ask you what they should give: say, ‘Give what you can spare.'" [TMQ Al-Baqarah 2:219] In other words, spending which causes no hardship and which is extra to one's needs. There is no concept of income tax in Islam as we find in western capitalist countries. Taxes are only levied on excess wealth and not on income. The State is also not allowed to impose indirect taxes such as sales taxes on goods and services. Nor can it impose taxes in the form of court fees, fees on petitions forwarded to the State, sale or registration of land, buildings or measurements or other types of taxes other than those in the shar'iah. This is because imposing oppressive or illegal taxation is one of the prohibited injustices about which the Messenger of Allah (saw) said: "He who imposes maks (custom duty) would not enter paradise." [Ad-Darimi, Ahmed and Abu ‘Ubayd] In western capitalist countries their taxation penalises the poor and vulnerable in society. Clever accounting and offshore Swiss bank accounts ensure the rich in western societies can avoid paying the majority of taxes altogether. In the UK for example, the Queen is one of the richest people in Britain yet she pays no income tax, whereas a poor single mother or an old age pensioner must pay income tax. With regressive taxes like the sales taxes on goods and services these hurt the poor more than the rich since the tax rates are the same for both. Unfortunately, the Muslim governments today see adopting the western capitalist system as the only way to achieve economic progress. We therefore find the same oppressive taxation introduced into Muslim countries such as the General Sales Tax (GST) in Pakistan. This is not to mention the endemic corruption where tax revenues are diverted from the State Treasury into the personal bank accounts of the rulers and other government officials. Taxes in Islam are only collected to raise the amount necessary to cover the deficit in the obligatory expenditure of the Bait ul-Mal. When imposing taxation, no consideration is given to the notion of preventing the increase of wealth, or preventing richness or increasing the revenues of the Bait ul-Mal. Consideration is only given to fulfilling the required expenditure on the obligatory needs and interests on the State. If any taxes are taken over and above the obligatory expenditure then this is considered a mazlama (injustice). The Court of Unjust Acts (mahkamat ul-mazalim) has the power to investigate any excessive taxation. If after the court's investigation the tax or tax-rate is deemed to indeed be a mazlama then the court can oblige the State to abolish or lower the tax and return any excess money to the Muslims. Therefore, the shar'iah has resolved the problem of financing the expenditure on the Ummah's needs and interests in a 21st century Khilafah. These are good points. One important one being to tax the excess riches of the rich (rather than a general income tax), but only if there is a shortfall in the Bayt al Mal (treasury of the state) and only for Islamically legitimate things, not for vanity projects and unneeded things like much tax in the Western world is spent upon. Hadhrat Umar (raa) considered doing that at one time I believe, and as we know he was rightly guided in his rule.
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