Islamic Taxation

Hussein Kafshgar Jelowdar

Key terms: tax, khoms, zakat, kharaj, pseudo tax, jezyah, distribution, saving, investment

The Persian word “maliat” comes from the root “mal” and is used in various meanings including reward, fine, duty, tribute, and the tax on property religiously bound. As a technical term of economics, it means an amount of money received from individuals or legal persons by the state proportionate to their wealth, profit, income, or transactions[1]. According to some Muslim authors, Islamic taxation is so defined: “the duty determined and leveled by the Islamic legislator on individuals’ property and possessions.” Every person protected by the Islamic state or living without the domain of this protection is duty bound to pay, in cash or otherwise, this debt of his/her according to the relevant regulations as soon as they qualify for this obligation[2].

Since the advent of state, statesmen needed money to run the government. This money was made in different ways. Part of it was raised by confiscating property and lending it afterwards. Private owners were forced to pay tax. Regional rulers were forced to pay tribute[3]. Taxation has been a common phenomenon the world over. Some historical documents indicate that, in ancient Greece, government was run by tariff. In ancient Persian Empire and Roman Empire too, various taxes were collected[4]. Physiocrats were the first authors in the West who studied taxation as an independent important subject matter[5]. In old days, taxation on agricultural production and capitation were the two more common forms of tax. In Europe, capitation was first introduced in 1471 in Briton. In 1797, income tax was legislated in Briton for the first time[6].

Fourteen centuries ago, Islam approved different forms of taxes common at the time so far as they did not violate values Islam cherished. In the Islamic system of taxation, we see the following ways of money raising for state: taxing land, agricultural products, unused capital, mining, extra profit, some species of cattle, camel, and sheep as well as capitation[7].

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