Economic System of Islam 15 – Zakah Distributive Justice

In the Name of God, the beneficence the Merciful, the creator and Sustainer of the universe, Peace, blessings upon his servant and messenger Muhammad forever. Meet Assalamu alaikum peace be unto you. Welcome to another episode of Islam and focus. Today we have our 15th program in our series, dealing with the economic system of Islam. We'll be continuing our discussion of distribution, and looking at the topic of Zakat and distribution of income. I'm your host Humbert Rashid and I have joining me, as usual, Dr. Jamal battery of St. Mary's University of the Jamaat Assalamu alaikum.

I remember if I could get you very quickly to highlight the main points that we touched on last week in our program. Okay, in the 15th program, we start at first by finishing a few points pertaining to the previous discussion on interest and interest dealing that has been forbidden by Islam. And we indicated that the prohibition of interest dealing in Islam does not necessarily mean prohibition of saving or investment. And we have seen that there are so many islamically acceptable alternatives for investment in a variety of ways.

partnership of varieties of form, using your own funds for your own business, buying common stocks from the market, in permissible areas, of course. And the main point that was clarified is that an important principle in Islamic law, which is called an on mobile order, that if you're exposed to profit, you must be exposed to loss if you get smaller profit, you can get larger profit depending on the actual performance rather than any pre arranged advance percentage. We also touched briefly on the function of banking system under an Islamic economy and we said that it does not mean that you have to

you know, cancel banking as a system at all, but that the functions of banking would be more like service investment, mutual fund type of thing, but not necessarily exactly the same way that they are operating today. And finally, there was a brief discussion on the question of consumption loans and government debt. And when we move into the last or the third aspect of

the main issues that you are dealing in an economic system, that distribution and we said that, in the matter of distribution, the basic rule is that

the government should not interfere in determining prices artificially, that the normal forces of supply and demand should be led to determine the price unless there is a basic disequilibrium or exploitation in the market whereby the government may interferes to make sure that the basic needs of people are met without undue exploitation. And finally, a similar problem also was raised. What happened if a person monopolize and withhold some of the basic foodstuff which are needed for people can he be forced to sell and again, he said that

if an emergency like that arises, he may be forced to sell but not at an arbitrary price rather at a fair

and equitable type of price. After all, the prophet has said in one of the selling and my own, that is the person who deliberately withhold or monopolize This is a cursed person. So the this is part of both economic as well as moral teaching.

Now, continuing with our discussion of distribution in Islam, the use of a middleman or a broker in distribution is this. What is the viewpoint on on the middleman or propers? In Islam? Okay.

Yeah, interference in principle, there is no difficulty with that. If a person is doing a function as another person,

and he's getting some pay for that, there's nothing wrong with it. But there's only one thing that Islam restricts. And that is people who act as middle persons, for the purpose of exploiting people's lack of knowledge and information.

In other words, to put it in economic terms, what Islam insists on in its economic system is the free flow of information between the buyers and sellers. To give you an example of this, it was reported in Bukhari, that the Prophet, Prophet Mohammed peace be upon him trying to stop put a stop to the practice where a producer, for example, producer seller comes or bring his things to sell. And before he reaches the market, somebody intercept him, and he says to him, alright, why did you send that to me at this price, and I sell it for you, and then he takes it and sell it at a much higher price. This was forbidden, because the idea here is that the seller should come first to the

market, find out whether what is the going rate for his product and then determine how much you want he wants to set but to exploit this gap of information is restricted. But otherwise, any actor in any activity by way of

you know, helping people

with free flow of information is not restricted in itself, so long as there is a specific service. Of course, in today's complex economy, you can do away with all metal persons, but you can reduce the number and again, provide information.

Now, earlier, you mentioned that Islam, attempts to achieve justice both in terms of distribution of commodities as well as in distribution of income. Could you perhaps explain for us some of the means that are employed by Islam to provide for the

distributive justice that is impressiveness? Okay, what the most important means would be zeca. I translated more, as you know, institutionalized charity.

Secondly, there's the voluntary charity.

Certainly, there's also the possibility of additional taxes beyond the minimum required, institutionalized charity, it can also be achieved through the law of inheritance. And Islam. These are basically some of the measures means of achieving some kind of social justice, and more equitable distribution of income in society. It's not only just distribution of commodities, but also equitable distribution of income. Maybe we could explore some of these a little bit more detail. Dealing, first of all, are beginning with some discussion of the cat, could you tell us what it is and

perhaps explain the meaning of the terms of God? Okay, on the question of the credit, just like to make a cross references, because in a previous program, in the series, e are the pillars of Islam, the seventh program, we dealt with Zakat, even though mainly as one of the basic Pillars of Islam. So you probably might make some reference to some of the material we discussed there, but perhaps putting it in a different way or looking from a different angle this time. But basically, to start with Zakah

is one of the main pillars, one of the five basic Pillars of Islam, it has been mentioned in the Quran, in conjunction with prayers, which is the most one of the most important requirements for Muslims, more than more than one more than 80, I should say, verses in the Quran.

It has been mentioned in the Quran, with the consequences of those who pays aka being rewarded by God and those who do not being punished by God, just to get quick reference because this will discuss them that program just cross reference to the verses, like in 2456, in 224, on in 1934 51, verses 15 through 19. In all of these, there's a vivid picture, showing how important the zakka as an institution, in a truly Islamic Society, but from the linguistic point of view, etymologically speaking, means two things it means purification. And it means also growth.

It is purification because it purifies oneself from selfishness and miserliness. And in a way, also This results in blessing. And this blessing, by the way is not only just stretch your blessing or growth,

it could be spiritual blessing, but as we will see, it has also economic blessing in the long term, as it affects the individual and society at large. So I'm trying to emphasize here that aside from any other aspects of Zakah, or purification,

it has to be based in the first place on faith in God, the love of God

The feeling of responsibility as the trustee of God and on earth. And as we discussed in previous program, that whatever property we have is a trust given to us by God. So, we have to dispense with it in ways which are pleasing and acceptable to him.

But, the point also to add here is that Zakah or institutionalized charity is not merely a sort of religious spiritual preaching, it is partly spiritual, there is no question about that.

But, but if it is only spiritual, it will be just like any universal motherhood statement, any religion for that matter or any philosophy would cause people to be charitable, but the kind Islam is quite unique. It is much more than that, it is a combination of the spiritual and ethical aspect, as well as the meticulous organization and institutionalization. It has aspects which are social,

political, and economic.

Well, but perhaps could you explain for us how in Why is a cactus more comprehensive than other teachings that about charity, I mean, other than general generalities, urging for choice, yes, it is quite different. And perhaps one of the good references that I found dealing with this is what I understand was originally a doctoral dissertation by Dr.

Shah, Yusuf al qaradawi. And this appeared in a two volume work, which is perhaps one of the most comprehensive works on Zika. That's quite difficult Zika or understanding of Zika.

And, in this reference, as in other differences, and Islamic literature dealing with the camp, one can easily point out to first social aspects of the cat beside the spreadsheet that we have discussed. In a way the car can be regarded as a sort of social insurance against

involuntary unemployment, it could be social insurance against inability to work against certain disasters or unfortunate events that may take place. And this would give a sort of feeling of brotherhood solidarity within society, which would reduce jealousy, it would reduce class struggle, as you might hear that term used frequently. It makes members of society feel that they belong, enriches this feeling of belonging within the members of society so that you don't get too many people who feel anti society and antisocial and sometimes would be driven even to crime because of this lack of feeling of belonging.

In a way also it is both

social and psychological also, because it trains the individual to have a feeling of social concern, to stop this apathy that's destroying societies today, as you're aware, it makes the person feel part of the system. And it's not like other pension systems, for example, because in many of the pension schemes, it depends on how much you contributed, or whether or not you contributed, in an Islamic system. Regardless of your contribution,

big or small, still, you are entitled for this social security aside from any other consideration.

Secondly, it could also be regarded as a political system, because a care or institutionalized charity can be regarded as a mechanism which join together the various segments of society and various groups within the society with the view of serving their mutual interest and their mutual concern. But perhaps one of the most interesting and important elements of zacher charity

is even economical.

First of all, the system of the care in Islam is one of the important means of fighting one of the greatest enemies of mankind, poverty, which is of course, an international problem faced in the east and west as you're all aware, but still try to fight poverty without necessarily killing the individual initiative. It recognizes stem that people can have differences in their capabilities and their talents and Islam does not insist on

A profession full equality in a sense that everybody wants to get the same income. But in the meantime, it tries to work from there to reduce the big gaps between the rich and poor. So it allows for initiative. But in the meantime, it looks after the needs of those who need also,

a second economic aspect is that zakka being an annual, regular, determined type of thing provides for a stable source of income for the state to meet

certain expenses and need

a third aspect, which sometimes is not as clear, but it's very important in terms of its economic implication is that by its very nature, the system of the care, or institutionalized charity in Islam, forces the individual to invest his money, and discourages herding of money. Why, because it's imposed every year, no matter how small the percentage may be, if you're not investing that money, you just keep paying the required charity on it. So you're, you're gonna lose it. So that in a way provides

strong inducement for people who have wealth, to use it, not to withhold it from circulation. And as we have indicated in a previous program, there are many economists who feel that this is very essential for the health of the economy. Because if people are keeping wealth from us, then of course, you get depression, and you get lots of economic problems and decline. But when people invest their money,

then it provides for jobs for others and general prosperity and the economy. No wonder then we find many,

like those who studied the system of the cat in Islam, both Muslims and non Muslims, I've given already one Muslim scholar who have written extensively on that conclude that

the system of care in Islam is quite unique. It has never been preceded before, by any law, or even religious teaching, it's quite quite a comprehensive thing. It's not just a matter of motherhood statement of being charitable. It's much more than that,

based on my understanding of the cut in taxes are not the same kind of thing at all. Could you perhaps just clarify what the main differences between the two are? Well, the reason that sometimes Zakah is mixed with taxes, is due to the fact that even though there are differences, there are still some limited points of similarities, I should say, between between Zika and Texas, at least three? Well, both Zika and Texas are compulsory, those are required. So this is one thing. Secondly, both also, are to be connected by given authority, the government, let's say,

thirdly, both Zakah. And taxes are collected by virtue of being a member in society. So it's not collected because of a certain specific service that you have received, but in general, by being a member of society and part of a total social solidarity, if you will.

However, as you indicated, quite rightfully in your question, there are definitely some basic and fundamental differences

between second taxes. First of all, as indicated earlier, the very terms occur itself means a blessing means purification, and should be done and paid by the Muslim, essentially, as a matter of worship, it's one of those five basic acts of commitment or submission to that.

And this makes it quite different from taxes. Because if you feel that you're paying your fair share, and you're doing that out of your obligation towards God, above all, you don't try to find ways to evade taxes. Most people do try to avoid not even to avoid paying taxes. In fact, we find a very interesting example that was narrated both in Ahmed and Pavani.

When some individuals came to Prophet Muhammad peace be upon him, and he was not aware that they have gained additional wealth wasn't a little bit, and they said, we've got this additional wealth and we would like to purify our wealth. So please tell us you know how we have to pay zakat on it. So people come in voluntarily saying, yes, you're not aware that I got that money, you know, I have to pay my share of it. Again, why because it's not just something that the state imposes, but they know that this is worship to God and obedience.

A second basic difference is that when you talk about taxes,

You know, from reviewing any budget, it's depending dependent on the government. If they say taxes, today's 15%, tomorrow, 17, day after tomorrow 15 you know, they determine the amount totally according to the needs of the country. And sometimes the

winds of this in effect empower.

In the case of the can Islam, however, we find that the Quran itself, which is the word of God for the Muslim,

may establish the principle of Zakat, the teaching of the Prophet determine a specific percentage of the care which nobody has the right to change, we're talking about the minimum. So the minimum for Zika is there's nobody can change that. And it has to be a separate budget also, because the collection of the care or charity in Islam would have to be directed to certain specified purposes as the Quran indicate eight particular categories of expenditures, and does not necessarily automatically go for any other expenditure by by the state. And this is the second, a third characteristic or difference, of course, is derived from these two differences. And that is the

system of Zakat in Islam is much more stable, and constant because of this lack of argument as to what the rate should be, the rate has already been set. So there isn't much dispute or time wasted. And that particular thing. One should add, however, that an interesting feature of the system of care in Islam is that it is the money or the property collected from those who are able to the rich, and going back to the poor. Whereas in the system of taxation, it's usually imposed on everybody, of course, but a big burden actually fought on the middle class, so called, and even the poor. And sometimes it is reverse financing, when some of those who are well to do get so many tax concession

and know how to play the you know, play the game. So in a way, it's almost like in some cases, the poor financing that if we were to exaggerated a little bit, but in Islam, it's strictly something to be taken for those who are able to, to help those who are really neat. It's not the reverse.

Now, in the calculation of as a cat do is done on the basis of capital or on the basis of income, what we cannot exactly say, for example, that system of care or charity in Islam is exclusively income tax.

Because after all, in the system that Islam provides, not every item of your income is subject to the can, for example, the part of your income, which is used or consumed for basic needs, like food, clothing, housing, transportation, and so on. That is not subject to soccer, it's if I will call it non catabolic

term that has been used recently.

In a way you can say that the care is primarily

imposed on your networks.

But it avoids the faults and difficulties with taxes which are imposed on capital, because of course, many people say if you impose capital, if you impose taxes on capital, then you are in effect discouraging people from saving or investing. But this is not the case in Islam for at least three reasons. One

is again, Islam is imposed on property which is potentially growing, that's could be subject to growth and investment.

To clarify that, for example, there is no record you on the jury, which the woman keeps for her personal use, for example, because this is not something that gives any additional wealth it just for her own use knows occur on your professional tools. For whatever profession, plumber, Doctor, whatever.

Certainly there is no soccer on your principal residence,

home

or your car. Even if you're a mission. You face a car only on articles of trade, you don't pay it on fixed assets like shelving and other things that you use to

to do your business. A second reason why it's better than any other tax that's imposed on capital is that it is very modest and reasonable. We're really talking here about most commonly two and a half percent

per year which is I think, quite reasonable. And thirdly, there is a minimum also which is exempt, usually estimated at about 85 grams of gold

Are the equivalent of course in money.

Better, I should add also that there may be also certain types of the car which are subject or are imposed on income, like income from agriculture or self employment. There are certain specific taxes on metals are oil, by analogy that comes from the earth.

So the it's not exclusively really either income or capital type of tax.

And I'm sure some people who are watching the program, particularly those who listen to the various budgets and bought them by the provincial federal governments would say, surely, this sounds good. But there isn't any way that you can

finance government expenditures in today's economy with simply using a relative's a calf two and one half percent. How would you respond to the skeptics? Okay. Well, first of all, when you talk about the tax rates in western economies, for example, it's over 30% and 25%, you're really talking about income tax, something which is imposed on income. In the case of Islam, it is imposed on networks, yes. So it might sound small on the surface. But as you know, the net worth is much more than an income in a given particular years. So like a person might have, for example, five, six,

high rises that is renting, so you'll really take into account on the net worth, not just on the income from them.

So this is one thing to clarify to be much more than it appears to be. Indeed, historically speaking,

as has been mentioned, in a previous program, during the reign of American Empire, as is nearly the end of the first century of hedgerows or migration Zakah from North Africa was collected, and they were not enough people even to claim it. That's why he instructed his local roller to buy slaves and set them free, because there was no MIDI. So historically, it was possible. And I am sure today, even if you take just the Muslim world, if Muslims are true to their face, and everybody's praying to this two and a half percent on networks, I'm sure that there will be no single person who would be left hungry, or in need. So if everybody does that, in a sincere and conscious way, it definitely

should be, should be enough. However, we're not saying that Zakah is the exclusive source of income for government that are

amount of money that is collected by way of

taxes on the produce of the land. Joshua, which is the equivalent of the Muslim phase, a Canon Muslim pay something equivalent to that to church also on the the overall costs of running the state, the property, which doesn't have any person to claim or inherit, and and if need be, even it could be additional taxes beyond Zika.

Now, a few minutes that we have remaining today's program.

Is there any basis for making the rate of sick cat flexible? Can it be flexible, more than two and a half percent? And if so, what is the basis for that? Well, as far as the code itself is, it's a stable thing. Nobody has the right to change, because that has been given in Revelation. So there is no room and if you open the door, again, for the care to be flexible, every government can, you know, explode that and you could get unjust rulers who try to play around with it. So this is a permanent, which is two and a half percent. And that's very reasonable, and not very excessive. But in the meantime, we find that Islam has also allowed the state is just ruler, or just government to

impose additional taxes if there is need for that. And if the amount of Zika is not enough, but you have first to start from Zika. If it's not enough, then you can move to some other.

There are a number of evidences that the Quran for example, speaks about both things occur. And it talks also about being charitable, as we find in verse two. Sorry, in chapter two verse 177.

Prophet Muhammad peace be upon him as narrated in utter misery. He said it clearly that in your property, there is a claim beyond the amount of observed care. And this is a very sound type of tradition, which is very strong.

And there are also additional things, additional text that seem to indicate that soccer is the bare minimum, it doesn't mean that you say I paid my tennis percent, there's nothing else. But there must be some guarantees, there must be a genuine need for additional funds beyond soccer. Secondly, it should be distributed in terms of burden in an equitable way.

It should also be spent wisely and it

has to be done only after the approval and consent of the in a consultative way with the representatives of the people.

On our time is gone for today we want to thank you for watching our program and invite you back next week when we'll continue our series dealing with the economic system of Islam. Thank you for watching us family. come to you.