Classification of taxation

Taxation can be classified on two different bases. Sometimes, we classify taxes on the basis of rate and amount. Sometimes, we classify them on the basis of the items liable to taxation. From the first point of view, they can be divided into the following four groups[26]:

1. Fixed tax includes zakat fitrah and some cases of jezyah and kharaj. In all these cases, there is a fixed amount due to be paid.

2. Proportional tax is a fixed percentage of property one ought to pay. No increase or decrease of the value of the property one owns affects the rate of the tax. Khoms is a kind of proportional tax.

3. Progressive tax is not legislated in Islam.

4. Retrogressive tax [27]is when the decrease or increase of the amount due to be paid bears a reverse relation to those of the revenue on which tax is imposed. As the revenue increases, the rate of tax decreases. An instance of this kind is seen in tax on camel, cow, and sheep in some required minimum limits (nisab).

Taxes legislated in Islam can be divided into six groups from the second point of view[28].

1. Tax on revenue includes zakat on wheat, barley, date, and raisin;

2. Tax on property (wealth) includes zakat on gold and silver;

3. Tax on savings such as khoms;

4. Tax on utilization of natural resources such as khoms on mining, zakat on camel, cow, and sheep;

5. Capitation such as zakat fitrah;

6. Tax on consumption, when one consumes more than their average needs, they must pay one fifth of the price of the goods and services consumed as tax.

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