Tax in Muslim Countries

Tax in Muslim Countries

Taxation is one of the oldest socio-economic phenomena which is as old as governorship. In the early ages, taxes used to be collected for the sake of rulers’ expenses and their revelry. The burden of taxes was mainly on the shoulders of farmers and merchants of poor class of society, while officials, aristocrats and religious leaders enjoyed tax exemptions.
Undoubtedly the emergence of Islam is a turning point in the history of taxation. Islam annulled unjust taxes which were imposed on poor people.
History witnesses that the fairest tax age was during the rule of the Guided Caliphs and early years of Islam. In that period Zakāt and donations were the income sources of the treasure house. The expenses of Jihad and defense used to be supplied by volunteer participation of masses. When the government needed, it used to take loan, but apart from religious dues, no obligatory taxes were taken from Muslims.
After the conquest of Iraq, by the command of the second caliph Sayyidana Omar bin al-Khattāb the system of Kharāj taxes was reorganized and obtained incomes from Kharāj became funds and pivot of incomes for the Islamic state. This process continued until the end of the Guided Caliphate era.
During the rule of the Umayyad caliphs due to different reasons the incomes of Kharāj gradually decreased, and then for the first time footprints of new taxes were seen which were imposed on people mostly by officials waywardly.
After the golden era of the early years of Islam, tax was not cleared away from society at all and continued in the next governments. After numerous changes and a long history, tax became a part of the modern economy’s bases.
Today governments undertake different responsibilities such as defense, education, enhancing health and public welfare. Tax has been a determinant element in budgets of most of the countries – especially in industrialized and developed nations – and a durable income for managing country and providing public expenditure.
Most of philosophers and economists believe that taxation by governments is a legal matter and it’s one of the legal requisites of modern governing. The clear and brief definition of tax is “compulsory share of each citizen in the expenses of government”. However, it has been saying to convince public opinions and interpret this mandatory: tax is an amount which should be paid to governments in exchange for enjoying public services, welfares and security as well as to carry out social commitment and the principle of social cooperation.
It is clear that this interpretation is insufficient for logical justification and explanation of theoretical basics of tax and its accordance with morality and freedom. Therefore, taxation never could get rid of criticism. Some reputable contemporary economists consider taxation as one of the examples of violation of personal freedom and self-ownership. Sometimes they become caustic and call it “modern and systematic theft”.
Considering the vast impact of tax on economy, society and continuous efforts of governments for better function of taxation system, it is necessary to explain the viewpoint of Islamic jurisprudence about taxation system. The directions of Islamic economy and political jurisprudence should be adverted, too.
As the phenomenon of taxation was emerged officially, Muslim jurists focused on explanation of its legal ruling. Imām-ūl-Haramayn Al-Jūwaini (1028-1085) is the first Muslim jurist who researched, evaluated and explained the legal and juridical basics of taxation. Referring to the principle of “advisability” and judiciousness and rational evidences, he clarified: “Whenever national treasury suffers from lack of income for managing country and to carry out its duties and responsibilities including expenses of defense, security and salaries of soldiers and armed forces, Muslim rulers can collect taxes from rich people to afford those expenses.
After Imām-ūl-Haramayn, his famous students Imām al-Ghazāli and al-Shātibi also adopted this verdict. The same fatwa was adopted and issued by ‘Izz al-Din bin Abd al-Salām, Imām an-Nawawi, Qādhi Ibn al-Arabi, al-Qūrtabi and many other jurists.
As it is clear, taxation was legitimated initially only for paying salaries of soldiers and settling defense and security matters, but jurists of moderns added public utilities (such as building canals) and whatever is considered public service to that verdict. Hence this viewpoint has become a basis for overall legitimation of taxation. (Osmāni, 1431: 297)
It is obvious that legitimation of taxation for governments is not without any terms and conditions; rather jurists – who permitted taxation generally – have ordained serious conditions and strong restrictions. In the case of neglecting those conditions taxation will not be legitimated at all. Hence the terms and conditions for taxation and rulings of its usages are as following:
I. In the case that treasure house is empty or the present assets are not sufficient for essential needs;
II. The ruler who ordains taxes should be a just ruler whose imitation is obligatory according to Shari’ah;
III. The amount of tax should be accorded with the required size;
IV. Taxation should be in accordance with the principle of justice and financial capacity of individuals;
V. Taxation should be temporary. When there is no need of tax or governments get other incomes, they should stop taking tax or it should be decreased;
VI. Governments should spend taxes wisely and carefully. (Osmāni, 1431: 301. Qaradāghi, 1430: 60)
According to today’s economic literature a favorable tax system should include five traits: economic efficiency, low-cost management, flexibility, political responsibility and justice. (Stiglitz, 1999: 456) These characters are in accordance with the Islamic principles; however Islamic juridical rulings are much fairer with more social and economic productivity.
It is clear that benefiting from Shar’i directions in managing tax system, transparency, governments’ responsibility and responsiveness, information and explanation of legal basics of taxation are foundations of culture-building and removing negative mentality of masses about taxation. Then society will look at tax as social just duty which should be adopted legally and morally. Paying taxes voluntarily decreases underground economic ends up with productiveness of tax system. Then national economy can forward to advancement and development.


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