Taxation serves as a tool for economic development and growth. According to Moj News Agency, people worldwide have come to the conclusion that they have to pay taxes for the services they receive.
Taxes consist of direct or indirect taxes paid in the form of money. In modern, capitalist taxation systems, taxes are levied in money, while in-kind and labor taxation are characteristics of traditional or pre-capitalist states and their functional equivalents.
The means of taxation and the uses to which the funds raised through taxation should be put are a matter of hot dispute, hence discussions regarding taxation are often tendentious.
In many nations, those who pay tax are the ones that can be considered citizens.
The majority of taxpayers agree on why they must pay taxes and are sensitive toward state incompetence or wastage of financial resources. They are, however, unhappy over unprincipled and high taxation.
Taxes in the Islamic law come in the form of Khums (one-fifth of savings) and Zakat (tithe). Islamic governments collect them and spend them on improving public services, speeding up economic development and enhancing national defense.
In fact, the expenditures of an Islamic government are secured through these two forms of taxes, and other forms of taxes deemed necessary. Imam Ali (AS) has said there will be no government without a tax system in place, but he added that it cannot be collected by force either.
Incidentally, the first person to pay direct tax in Islam was Imam Ali (AS).
Zakat is one of the obligations of Islam and refers to spending a fixed portion of one’s wealth for the poor or needy, including people whose hearts need to be reconciled, slaves, those in debt, those in the way of God and travelers.
The basis of Zakat is given in the Holy Qur’an: “Of their goods take alms, so thou might purify and sanctify them; and pray on their behalf, verily thy prayers are a source of security for them.“ (9:103)
A Muslim may also donate an additional amount as an act of voluntary charity, in order to achieve divine reward.
There are two main types of Zakat: Zakat on traffic and Zakat on wealth.
Zakat on traffic (Zakat-ul-fitr) is a per head payment equivalent to the price of around 2.25 kilograms of the main food of the region (this may be wheat, dates or rice, depending on the place) paid during the fasting month of Ramadan by the head of a family for him/herself and his/her dependents to the Zakat collector.
Zakat on wealth (Zakat-ul-mal) comprises all other types of Zakat, such as on business, crops, livestock, minerals unearthed, etc. The payment of Zakat is obligatory on all Muslims.
According to the Shiite interpretation also, which is based on the Holy Qur’an and the authentic statements and actions of Prophet Muhammad (PBUH) and his Infallible Household (AS), there are two main forms of taxes: Khums and Zakat. The Shiite consider both types to be a personal obligation, meaning that every Muslim has the full responsibility of purifying his own money, but the government should not force any individual to pay Zakat or Khums.
Khums is taken from war booty, gold/silver coins, treasures, diving for pearls, savings and so on.
In modern days, the most common type of Khums extracted is of the last type. Khums on savings is paid by taking one-fifth of the increase in income saved after one lunar year, and this is done after paying debts and bills.
Zakat, on the other hand, according to the Shiite teachings, is assigned to specific goods. There are nine types of goods from which Zakat is paid out: gold, silver, camels, cows, sheep, wheat, barley, dates and raisins. Each type has its own ’Nisab,’ or a quota which makes payment of Zakat mandatory.
In both cases, they are obligatory on the individual and cannot be forcibly taken by the government.
In the Islamic system, the chief aim behind tax collection is to help the government efficiently run the Islamic society, meet the needs of the needy, help the region develop and boost its national defense capacity.
Also, taxation is best mechanism for enforcing social justice by transferring wealth from the rich to the low-income strata. In fact, no other mechanism other than tax can help develop the national economy or administer social justice in a sustained manner. This explains why many candidates during election campaigns talk about taxing less for implementing their future programs, undertaking fair distribution of wealth and administrating justice.
With regard to the relation between state taxes, Khums and Zakat, it must be noted that state taxes play a specific role in giving a government the means to meet a particular need.
State taxes are independent of other payments such as Zakat and Khums. They differ in each and every country and it is wrong to conclude that they must be similar for everywhere.
On the whole, taxation help administer a nation, such that people enjoy the benefits of health, safety and prosperity.
Given the importance of taxation, the government should pave the way for colleting taxes, as there will be no public facilities without the budget resources. Governments failing to collect taxes in an efficient manner, particularly when they have no other source of income, are unlikely to survive.
The government can only ensure cultural, economic and public welfare, socioeconomic justice, security, independence and territorial integrity with the help of taxes.
Also, the government should have the capacity and the means to provide these facilities at all levels. This will largely depend on how the government secures the resources for its annual budget.
Securing the budget has its own legal ways and strategies, and fair governments are the ones that secure their financial resources through equitable means.
Taxation has been introduced to help secure the necessary finances for the governments, but in an Islamic country the type and amount of tax should comply with the precepts outlined by the Holy Qur’an and the teachings of Prophet Muhammad (PBUH) and his Infallible Household (AS). In other words, taxation should be fair and not oppress taxpayers.
In Islam, paying taxes were viewed as undertaking jihad, which means defending the country against enemy aggressions--one of the most admirable of acts. However, people are free to contribute as much as they can afford without any obligation.
The difference between Islamic taxes and non-Islamic financial responsibilities is: The basis for tax and its amount depends largely on the government’s requirements. The Holy Qur’an only reminds people that it is a duty to support a legitimate government meets its legitimate requirements by paying taxes, allowing the circumstances to shape the taxation mechanism and volume. The Islamic government ensures that the wealthy pay more and nobody is burdened by taxes.
Ultimately, all strata will willingly pay their share of tax when they see its financial transparency, fairness and benefits.