Comments on Caliphate Online: Taxation in Islam: Wealth Tax

Imposing taxation is not totalitarian. Every state...

2010-05-16T11:18:33.044+01:00

Imposing taxation is not totalitarian. Every state in the world imposes tax on its citizens to raise revenue for looking after their affairs. The Caliphate is no different.

The shari'a has defined the taxes the Caliphate is allowed to impose. It can't impose income tax and VAT but it can impose a wealth tax if there is a shortfall in the state's budget as the article details above.

the calipha is not a state it is a khalifa, chariy...

2010-05-16T09:15:40.414+01:00

the calipha is not a state it is a khalifa, chariy comes from heart not by govts force. islam is not even on the wing of the west(eg right wing or left), we shudnt confuse it with that but take the example o the prothet, we are all individual shareholders in the land this, being that all land is owned privitely with the idea of every individual owning a share. you might say the caliphate is not totalatarian but your veiws on it seem to be. power corrupts so does too much tax. the only fuctoin of govt are to ordain sharia. NOT REGULATE FREE MARKET OR ITS NO LONGER FREE

You may find this article useful for dispelling so...

2009-02-16T16:17:00.000Z

You may find this article useful for dispelling some of the myths surrounding the Caliphate being a totalitarian state with a command economy:

http://www.caliphate.eu/2007/10/caliphate-is-not-totalitarian-state.html

I take your points about state inefficiencies onboard. However, this article is not talking about the administration system which is decentralised in the Caliphate. The article is talking about taxation which every state in the world needs no matter how minimal the government seems to be.

The current financial crisis has shown that unregulated free markets is a failure and there needs to be state regulation to a certain degree.

One point you raised,

[i]Even without this, a general culture of contempt towards civilians can arise in standing armies.[/i]

A standing army is a necessity nowadays. In fact there has been a standing army since the time of Umar bin al-Khattab with a diwan setup to assign them salaries.

Its true that in certain Muslim countries there is a policy of seperating the army from the people. However, with the correct leadership and army structuring this doesnt have to be the case. In Pakistan (pre-musharraf) the army was loved by the people and seen as the most incorruptable institution. They were also seen as very Islamic.

In the west they have no problems with standing armies.

In the Caliphate every Muslim 15 years or older (male or female) is obliged to join the army reserves and undertake military training. There will be a love for jihad among the people so I cant see any divisions arising.

Assalaamu alaikumFirt of all, thank-you for pointi...

2009-02-15T10:51:00.000Z

Assalaamu alaikum

Firt of all, thank-you for pointing our our 'taxation' realities.

You mention an army. As far as I can understand, the early Muslims did **not** have a standing army. Neither do the Swiss. Look what happened to the 'Uthmani KChalifate - brought down by a secular nationalist (and downright racist) movement that arose within the army. I once commented, in Muslim country 'B' that all the army and national guard that I had seen in Muslim country 'A' looked almost identical, like they all came from one tribe. It was pointed out that the army in country 'B' also all came from one tribe, in a remote, undeveloped region. They have no empathy for the majority in the major population centres. Handy for the 'ruler' if there was an uprising. They would shoot.
Even without this, a general culture of contempt towards civilians can arise in standing armies.

I think this, together with the idea that industrial development can be centrally directed, is an error caused by our adsorption of the fatal conceits of 'big state' solutions. Obviously, the early Kulafa' did not have telephones, email, telegraph, the ability micro manage, that has been around one way or another for the last century or so. As a consequence they needed and undoubtedly had better "personnel" skills, delegating the right man for the job and letting him get on with it. No bureau of this and that deciding, with infinite wisdom, everything in Moscow (or Washington, now, it would seem)

The nation state is something that has come into being over the last few hundred years. Scientific socialism has arrived and departed in the last century. Do we need their baggage? Some of the gulf states are actually, despite many valid criticisms, demonstrating that the light hand of the state gets better results. As someone who has worked with both the private and the state sector I can assure anyone that there is no more sickening waste of resources than takes place within the state, and it is invariably accompanied by the most nauseating sanctimony. Anyone who thinks that Muslims are not capable of this needs to wake up and listen to the endless hadith, quoted out of all context by individuals who are in dire need of some kind of diversion.
The only difference between the naked corruption in so-called Muslim countries, and the bureaucratic sophistry that simultaneously strangles us and fails to solve the problems it supposedly addresses here, is that here is is all very cleverly dressed up.
We Muslims have a remarkable history of dealing with welfare and similar issues through endowment charities, often guided by trustees who have been the most successful in their respective fields - **not** by state bureaucrats. Please may I suggest that in this area we consider a less centralised model, yes, with a Khalif, but stripped of this not-quite-as-fashionable-as-it-used-to-be social engineering. And we look to what has worked for us in the past, not what leftists tell us ought to work, according the their theories which are not exactly Islamic. They are not exactly Newtonian physics either, if they had been, they would have worked. There is knowledge worth having and knowledge that isn't. Interesting how the good stuff has Islamic roots.

Aoa, I have a question In islam there is no concep...

2008-09-23T10:21:00.000+01:00

Aoa, I have a question In islam there is no concept of income tax right? because we encourage money to be rotated so that alot of money is not in few hands instead of income tax we have savings tax. If you could please shed some light on savings tax and also isnt wealth tax and income tax the same thing. Income tax is on a certain amount of money for example people earning 100000 must pay it under this you are not to pay income tax this is progressive can you please tell me how this is wrong and also if someone is saving up to make a house a necassity there will be savings tax on it wouldnt that be regressive? please explain because I have a class tomorrow and i would like toexplain this.
Thankyou

Wa alaikum as-salam,JazakAllah Khair for these exc...

2008-07-17T20:18:00.000+01:00

Wa alaikum as-salam,

JazakAllah Khair for these excellent questions.

1. The article gives the Islamic concept of Wealth Tax and its limits from a legal perspective. The practical implementation of the Caliphate's tax policy and the administrative processes it adopts is another seperate topic.

Many of the administrative mechanisms on how to collect taxes, budget forecasting etc will most likely be adopted from the systems already operating in the west. This is similiar to what Umar bin al-Khattab (ra) did when he adopted the diwan method from the Persians for organising the State Treasury (Bait ul-Mal).

The short answer to your question is that the Khilafah will be forecasting its budget over many years and setting aside contingency for natural disasters, unplanned wars etc. Its not the case that the Bait ul-Mal must be physically empty before wealth tax can be imposed. If the budget forecast shows a deficit in the key areas of the state over a number of years then wealth tax will need to be imposed.

2. There are two aspects to answering this. Firstly, there is the concept of paying taxes. In Muslim countries today people dont pay tax or try and avoid it. However, when it comes to zakat and sadaqah they pay it voluntarily even though many of the governments do not oblige it. This concept of paying tax will be dealt with in another article inshAllah. Due to the Muslims taqwa paying tax to the Khilafah is a worship and rewarded action. Muslims are the most generous nation when it comes to giving money as long as its used for Islamic reasons. If people have confidence in the Khilafah's management of the economy and they are motivated from Islam avoiding taxes wont be a problem for the masses.

The second part of the question concerns the practical process of tax collection. This will be similiar to the west. We will use tax returns and employ tax inspectors to audit the wealth of companies and individuals. The Khilafah cant raid someone's house to find money stored under the bed as this is spying. But the open wealth in the form of land, crops, property, products, services, bank savings etc can all be audited and used in the tax calculations. As in the west there will be bands to determine if someone is eligible for paying wealth tax at all.

3. This is dealt with in the book Accountability in the Khilafah which is in the Books section of this blog.

Assalamalaikum Brother May Allah (SWT) reward you ...

2008-07-17T18:34:00.000+01:00

Assalamalaikum Brother

May Allah (SWT) reward you for this article.

It raises some questions in my mind, you say that the state will only impose wealth tax when there is a deficit in the bait al mal.

Collecting taxes is always a difficult task. How would the following issues be addressed.

1) When wealth tax becomes due, i.e if you do not know you have a deficit, how can you impose a wealth tax.If you do it afterwards isn't it too late?

2) Also determining who is wealthy, will the state know how much money an individual has. Would this not be considered spying. In the western system, the authorities can find out but they do not have record of how much each individual has.

3) What happens in the event that the government is incompetent in managing the affairs, it will just come to the wealthy to make up the shortfall. This can cause problems and dissent in society as people may feel that they are paying for the states incompetence and inefficiency.