The Tragedy of Zakat and Taxes

The collection of zakat on gold and silver (i.e., money) ended sometime during the caliphate of Uthman ibn Affan (ra). It continued for a while to be collected on grazing animals and agricultural produce as collectors were still assigned and sent out. The latter (cattle and agriculture) were perhaps the most important zakat properties at that time, but it seems clear that money is far and away the most important in our times.

Sadly, though it is the third pillar of Islam, is mentioned 26 times in Allah’s book and is frequently paired with prayer itself, it has been very largely neglected in our time. As an organized system the way it was instituted by Allah’s Messenger, this neglect is nearly 100%.

Even sadder than that, is that most Muslim countries and even individuals have come to accept various forms of taxation which we have adopted from the non-Muslims. These include sales tax, income tax, customs duties and other things. It is never lawful for the ruler to take the wealth of citizens in Islam without a clear evidence and reason and never under any circumstances if the funding sources instituted in the Law itself have been abandoned and not put into practice prior to levying other forms of taxation.

The Prophet (sas) said at the Farewell Pilgrimage, as recorded in Sahih Al-Bukhari:

 Your blood, your wealth and your dignity are sacrosanct among you like the sanctity of this day of yours in this month of yours and this land of yours. Let the one present deliver this message to the one absent, for the witness may deliver it to another who understands it more then he does.  فَإِنَّ دِمَاءَكُمْ، وَأَمْوَالَكُمْ، وَأَعْرَاضَكُمْ، بَيْنَكُمْ حَرَامٌ، كَحُرْمَةِ يَوْمِكُمْ هَذَا، فِي شَهْرِكُمْ هَذَا، فِي بَلَدِكُمْ هَذَا، لِيُبَلِّغِ الشَّاهِدُ الغَائِبَ، فَإِنَّ الشَّاهِدَ عَسَى أَنْ يُبَلِّغَ مَنْ هُوَ أَوْعَى لَهُ مِنْهُ

Also reported by Al-Bukhari, the Prophet (sas) said:

 I have been commanded to fight the people until they bear witness that there is no deity but Allah and that Muhammad is His Messenger, establish the prayer and render the zakat. When they do that, their lives and property are in absolute protection from me except for the right of Islam – and their judgment is up to Allah.  أُمِرْتُ أَنْ أُقَاتِلَ النَّاسَ حَتَّى يَشْهَدُوا أَنْ لاَ إِلَهَ إِلَّا اللهُ، وَأَنَّ مُحَمَّدًا رَسُولُ اللهِ، وَيُقِيمُوا الصَّلاَةَ، وَيُؤْتُوا الزَّكَاةَ، فَإِذَا فَعَلُوا ذَلِكَ عَصَمُوا مِنِّي دِمَاءَهُمْ وَأَمْوَالَهُمْ إِلَّا بِحَقِّ الإِسْلاَمِ، وَحِسَابُهُمْ عَلَى اللهِ

Note: In case any reader is not aware of these issues in Islam, the above hadith could be taken out of context. The point of this statement of the Prophet (sas) is the sanctity of the lives, wealth and dignity of individuals and that it can never be taken from them except with a specific dispensation in the Law. As for “fighting the people until they become Muslim”, we of course know from many other texts and from the life of the Prophet (sas) himself and those after him that there are other options and people can live in peace as non-Muslims under Muslim governance and many have done so in the history of this nation. However, that is not our current topic.

Aside from the general principle of the sanctity of citizen’s wealth except with a specific dispensation from the law, many of these forms of taxation were known in the time of the Prophet (sas) and have been expressly prohibited in the strongest of terms.

Some of the favorite taxes in the world today are sales taxes, income taxes and customs duties (tariffs). These are very, very forbidden in Islam – even more so if the legitimate sources of public funds have been abandoned! Once, during the lifetime of the Prophet (sas), a woman confessed to adultery and insisted on the punishment as a purification and the completion of her repentance. Eventually, the punishment was carried out. One of the Companions uttered a curse against the one being stoned. Hearing this, the Prophet (sas) said as recorded in Sahih Muslim:

Easy, O Khalid! For by the One in whose hand my soul is, she has repented such a repentance that if only the taker of maks would repent like this, even he would be forgiven!” Then, he (sas) ordered for her to be brought, he made the funeral prayer on her and she was buried.  مَهْلًا يَا خَالِدُ، فَوَالَّذِي نَفْسِي بِيَدِهِ لَقَدْ تَابَتْ تَوْبَةً لَوْ تَابَهَا صَاحِبُ مَكْسٍ لَغُفِرَ لَهُ»، ثُمَّ أَمَرَ بِهَا فَصَلَّى عَلَيْهَا، وَدُفِنَتْ

So, what is this maks which according to the words of our Prophet (sas) is more heinous and more in need of repentance than adultery? It is sales tax! The word was mostly used to mean small amounts that rulers would collect on every sales transaction.

It also covers customs duties and tolls on roads as these were other ways the word was used. Moreover, governments cannot take anything at all from their citizens unless:

  1. All methods ordered or allowed by the Law have been completely implemented, but are insufficient to meet a pressing need.
  2. An extraordinary situation or necessity requires the collection of additional funds. In that case additional levies could be allowed ONLY to the extent and for the period of the necessity at hand.

Even if the conditions of #2 arise, it is never permissible to jump over #1 and those must be put in place first.

All governments need sources of public funding to maintain the safety and welfare of their citizens. Islam is no exception to that. However, one of the biggest tragedies of this Ummah is that we have abandoned the methodologies commanded and permitted by Allah in favor of criminal acts which Allah has forbidden.

Every time we depart from what Allah gave us we go to something inferior in this world and in the next. Economists understand that while public funds are a necessity, there is a balance between the harms and the benefits of various methods of collecting these funds. The positives are clear: this is how government can fund public safety, defense, education and other things. The harm of most kinds of taxation is that they suppress the economy and economic activity, which in turn reduces the base for the taxes in the first place. They can also increase poverty and make life more difficult for those who have less.

Most Taxes Stifle Economic Activity

This is more pronounced the more funds are taken from people who have less. This is because if it were not taken, they would have spent it on their needs and wants. This economic activity has a ripple effect on those who provide those goods and services and on up the chain. On the other hand if money is taken from wealthier people, it has no effect on their spending and may only reduce the amount of idle wealth they have in savings.

Zakat is far superior to all modern methods of “taxation” or means by which governments collect funds for needed services from the citizenry. This is because it is only taken from “excess”. Since zakat is only due on wealth that was in one’s possession for the entire year, it is clear that it was not needed during that entire period. The focus here is on getting wealth which was “doing nothing” back out into the active economy. This is a pure benefit with no downside.

When you collect funds from people who otherwise would have spent it on their needs and wants, it is two-edged sword. Yes, you get the needed funds for public services but on the other hand you push economic activity down. Such taxes over time tend to destroy their own base and may have to be raised repeatedly as the economy slows. Because zakat is taken exclusively form excess and idle wealth, it has no such negative side-effects, in fact exactly the opposite!


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