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A detailed analysis of the economy
reveals that the whole economic set-up of our country is based on great
vice and evil.
The foremost evil in it is the institution
of Banking. Through this institution, the whole nation’s wealth is rendered
at the disposal of a few individuals. In the guise of national development
and stability, all the money is actually used to satisfy the whims and
lusts of a few capitalists. Banking, on the one hand, produces economic
disparity and, on the other, cripples the national economy. While the rich
get richer and the poor get poorer, a country gets caught in a vicious
circle of procuring external loans for its own sustenance. It is because
of the institution of banking that a country has to rely on money borrowed
on interest from its own people through investment certificates, prize
bonds, rifle draws and other alluring schemes for the completion of various
welfare and commercial projects and for administration and defence requirements.
The second evil is system of taxation.
The government has an almost unlimited authority to impose whatever amount
of tax whenever it likes on the people, while the rates of Tax fixed once
and for all by Allah and His Prophet (sws) are not taken into consideration.
As a result, it has become almost impossible for people to carry out business
honestly or pursue any other economic activity. Every year the national
budget is anticipated with dread and fear. Every new tax decreases the
credibility of the government and represses the spirit of its people to
come out and offer what they can if their country is in need of their assistance.
The third evil is that the system
does not uphold the rightful claim of the workers to be granted both a
basic salary and a share in the net profit according to the extent of toil
and labour put in. Although the industrial workers have been granted some
other facilities besides their basic salary, yet their share in the total
profit has only been accepted half-heartedly. The conditions of the land
workers is even more pathetic.
The fourth evil is the total lack
of acknowledgement of the fact that every penny over and above a person’s
needs does not belong to him; the poor and the destitute are its rightful
claimants. As a result, needy citizens have been deprived of this right
and the whole system is unable to provide them even with the basic necessities
of life.
The fifth evil in is the menace of
large cities, which are actually large industrial centres. Instead of dividing
the resources of development into small units and providing all the citizens
with equal opportunities, these resources have been concentrated in a few
areas which receive development at the expense of others. Moreover, these
large cities have become perfect breeding places for criminals and have
also been responsible for the disruption of our cultural traditions. Not
to mention the fact that congestion and pollution have deprived people
of fresh and invigorating environment.
These are the major evils which plague
our economic set-up. They have, in fact, significantly contributed to the
moral degeneration and regression of the whole society. In our estimation,
the solution to these problems lies in restructuring the economy of
Pakistan on the basis of a just distribution of wealth and self-reliance
in such a manner that gradually the government has no need to impose any
tax on its citizens other than zakah.
For this objective, the following steps should be taken by the government:
1. Interest should be totally abolished
and the institutional creation of credit should be totally prohibited in
the private sector. All banks should be converted into various branches
of the Bayt’ul-Mal where people
can deposit their savings. These branches should provide protection, exchange,
short term loans and other similar facilities. In return for this service,
the government should be allowed to invest the deposited funds to establish
a broad-based public sector according to the requirements of the country,
upon the precondition that without being given any profit on the original
amount, a depositor will be returned his money on demand. The industrial
enterprises and units so created in the public sector shall be run by the
government, and, wherever it is required, the private sector should also
be called upon to participate in their running and management by buying
a certain quantity of the shares of these enterprises. Alternatively, by
imposing Khiraj (tribute) on
some of these industrial ventures, the government may entrust their entire
management to a party of the private sector just as the Caliph ‘Umar
(raa) had done so with the conquered lands of Syria and Iraq which
he had kept in state ownership and had entrusted their management to their
original owners, imposing a fixed tribute on them according to their produce.
2. Further domestic or foreign loans
should not be taken in future to run the country. The foreign loans, as
well as the interest on them, should be repaid by following a certain schedule.
Domestic loan should be converted into equity by transforming this loan
into units in the National Investment Trust created for this purpose. Alternatively,
an option of remaining a creditor may be given to some or all of the domestic
lenders to the government.
3. A National Defence Fund should
be announced in which all the citizens of the country should be invited
to contribute whatever they can for the defence of their country. A schedule
of commitments should be worked out with all those who can donate in this
cause.
4. Every economic venture which leads
to moral misconduct in the character of an individual, is a means of deceit
or damage for the parties involved, or is a cause of accumulation of wealth
in the society should be declared unlawful. Interest, insurance, gambling
and hoarding should be prohibited, and the law of inheritance should be
correctly enforced in matters of all types of wealth and property.
5. Concerning zakah,
the following aspects must always remain in consideration:
i) There is no basis in the Qur’an
and Sunnah for the condition of making the recipient the owner
of the money given to him (Tamlik)
imposed by our jurists. Therefore just as zakah can be given in
the personal possession of an individual, it can also be spent on projects
of public welfare.
ii) Nothing except the means of production,
personal items of daily use and a fixed statutory exemption called nisab
are exempt from zakah. It shall
be levied annually on all sorts of wealth, all types of animals and all
forms of production of every Muslim citizen. However, if a need arises,
an Islamic State can give a relaxation on any item.
iii) It should also be borne in mind
that according to the various heads mentioned in the Qur’an,
zakah is not merely for the poor and destitute, but under al-‘amilina
‘alayha, it can be used to pay the salaries
of all government officials, under al-mu‘alafati
qulubuhum, it can be spent to
meet all political expenditures in the interest of Islam and the Muslim
Ummah, under fi sabil-Allah,
it can be expended on da‘wah ventures and mosques, education and research,
Haj and ‘Umrah facilities, Jihad and Qital, and other similar
projects and ventures of public and religious welfare, under Ibn‘ul-sabil
it can be spent on projects like roads and bridges.
iv) If the basis of the directive
is kept in consideration, all forms of industrial produce, all forms of
production based on various skills and all forms of rent on various items
or buildings must be classified as produce and not as wealth; therefore,
their rates and nisab should
be derived on the basis of the rates and nisab specified by the Prophet (sws) for land produce.
v) The rates of zakah in all forms of production should be fixed on the basis of the principle
derived from the Prophet’s directives (sws). According to this principle,
zakah on all items which are
produced both by the interaction of labour and capital is 5%; on items
which are produced such that the basic factor in producing them is either
labour or capital, it is 10% and on items which are produced neither as
a result of capital nor labour but are actually a gift of God, it is 20%.
According to the above mentioned principle,
the following system of zakah should
be imposed in the country according to the precepts of the Islamic Shari’ah:
Zakah on Wealth
This is deducted at the rate of 2½%
annually after subtracting the statutory exemption (52.5 tl / 612gm silver
or its equivalent or gold or....’) and taking into consideration the exemption
of personal items of daily use, for example, personal belongings as house
and car. Tax on trade capital should also be levied at the same rate, considering
this capital to be the sum of cash and stock in trade.
Zakah on Produce
Zakah on produce is deducted on production at the time of produce after subtracting
the statutory exemption (1119 kg dates or their equivalent in cash) and
taking into consideration the exemption of the means of production, for
example, tools and machinery. Depending upon the kinds of items, zakah has three rates: 5%, 10% and 20%.
a) Produce from
irrigated lands
b) Industrial
produce from factories
c) Services
provided, for example airways, railways
d) Income
of all private educational institutions.
10%: On items which are produced such that the major
factor in producing them is either labour or capital, but not both. Examples
include:
a) An artist’s
creation like paintings
b) The works
of scholars and intellectuals
c) All rented
houses and various forms of rental income
d) Produce
from rainy lands.
20%: On items
which are produced neither as a result of labour nor capital but are actually
a gift of God, for example treasures which are discovered.
Zakah on Animals
All those animals which are bred and
reared for the purpose of trade and business are subject to zakah.
The details of these can be seen in any book of fiqh.
6. If in the means of production, a person’s right to
run and manage what he owns of them results in injustice and usurpation,
the state has all the authority to interfere and debar a person from this
right, though, only after the decree of a court of law or of the Parliament.
For example, all the agricultural lands of the country, by the participation
of the government, may be transformed into large mechanised farming units
and the planning of their cultivation and harvesting should be done at
the national level. A National Land Commission should be duly appointed
for this planning. The management of these farms should be entrusted to
boards comprising the owners of the land, representatives of workers and
the elected representatives of the state. Government should provide seed,
machinery and water, while the workers should provide all the effort needed
to till and harvest the soil. The income generated from these lands should
be distributed among the three parties equally. The workers of course should
be given a salary as well.
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