Al Furqan Educational Academy

Zakat, in practical terms, is a tax imposed by God; in spiritual terms, it is the purification of your wealth. The calculation of Zakat is understood differently. Some see it as a tax on your annual income and some on your accumulated wealth (less items of personal use).

Even within each, “income” and “wealth” are defined differently. Some believe that wealth is measured in terms of cattle, grain, gold, clothing etc; leaving out stocks, shares, bonds and deposits because these instruments of finance did not exist at the time of the Prophet.

Scholars however, are unanimous in their verdict that the rate of zakat is 2.5%. This percentage though, is not to be found in the Quran, despite the repetition of payment of zakat at least 27 times! Zakat is even mentioned during the time of Jesus (19:30-36) but is again not defined. If there was meant to be a fixed rate, surely God could have added this crucial bit of information in one of them and saved us the bother. He has been meticulous in apportioning inheritance by long verses but with this incumbent duty of every Muslim, He has not bothered despite having ample opportunity. An oversight by God Almighty or a deliberate omission? Obviously the latter. Then what is the reason for the omission?

Zakat is a tax meant for the compulsory redistribution of wealth. Make no mistake, Islam is basically Capitalistic in nature (allows private property, inheritance, encourages business) but has social undertones (zakat, equality). Zakat, which means “poor-rate”, clearly indicates the end-use of the tax. Verse 6:90 spells out certain categories of end-uses; to help the poor and needy, for missionary purposes, helping those in debt, for travelers and as expenses towards the administration of zakat. Purposes such as ransoming captives and (as is sometimes interpreted) for those fighting in the way of God, are also mentioned, but are irrelevant today.

Most governments impose a tax on their wealthier subjects as a means of redistributing wealth through subsidies or social security measures. Other than for missionary purposes, most secular governments use taxes for the very same ends mentioned in v.9:60. If the purpose of a particular Islamic law is being served through a non-Islamic forum, shouldn’t we accept it as Zakat? That zakat is a state subject (as opposed to being the responsibility of the mosque Imam) also comes through very clearly in the above verse and further strengthens this argument. Therefore, if the country you live in decides that by paying x percent taxes, you are fulfilling your obligation, then that is sufficient Zakat, whether the supposed 2.5% has been breached or not.

What happens then if I live in a non-Muslim Country and my taxes (zakat) will not go towards helping needy Muslims but towards areas that may be detrimental to Muslims elsewhere, like in the United States of today, where tax collections may partly fund missiles aimed at innocent Iraqis? A valid question, however, one needs to look at things in perspective. Democracies publish their Income & Expenditure statements. The percentage of revenues from Direct Personal Taxes do not form a large part of total revenues of the government. So long as the quantum of personal tax collected was used for social purposes in the overall statement, the purpose of zakat can deem to have been served.

Critics to this line of argument will quickly point out that in a non-Muslim country; most benefits will go to non-Muslims. Agreed, your acceptance then will hinge on whether you believe that 9:60 (or other verses) specifically intend the poor, the needy, those in debt and travelers to be Muslims, which this verse does not specify. There is also an opinion to widen the concept of Ummah to mean Universal Brotherhood, which brings benevolent non-Muslims into the ambit.

The one end-use that is not served by secular governments is the need for Dawah; propagation. This an individual can address on a separate basis if he lives in a non-Muslim country, which is why, in all His wisdom, God has not defined the percentage of tax.

Another important aim of Zakat is against the excessive amassing of wealth. If after paying your taxes, you feel that it was insufficient and that you can afford to pay more and your wealth is lying idle, then it is your duty to give additional charity. God has been kind enough to leave to the individual to define for himself the word “excess”. So if Bill Gates has a personal fortune of $45 billion, has he got excess wealth? Possibly, but that is up to him to decide and answer for. Obviously, he feels that he can give more, so he has set up multi-million dollar charity funds in addition to the taxes he pays. That, in my opinion, is following the spirit of the law on Zakat.

There is an interesting angle to including Zakat as an individual obligation. By putting the onus of zakat on each individual, we have to pay tax, not wait for the IRS to come knocking. By doing so, we embody an ideal citizen (helps in dawah). By voluntarily paying our taxes we lessen the administrative burden for governments, thereby allowing more effective use of zakat. The benefit of such compliance is far reaching in an increasingly populated world. On the flip side, what happens to this approach if the country imposes an unreasonably high rate of taxation like it happened in India for a while in the 1970’s when the rate of taxation was 97.5% (for the highest bracket)? Should we still be ideal citizens?

The aim of God Almighty is not to unnecessarily trouble the believer by imposing on him a duty greater than the extent of his ability (2:286). It is possible that governments may err as in the above example. Using the same principle of paying more when it is felt that there is excess wealth, one needs to pay less when faced with the prospect of paying unreasonably more. Where it is not possible to pay less tax, one can take a credit during more friendly tax regimes. The principle is honesty to ourselves and towards God.

Combining the two examples of USA (above) where a Muslim may consider it inappropriate to accept personal tax as zakat and pay the 2.5% separately to his taxes, and India, where the tax rate was 97.5% for a few years; he would then have to shell out 100%; all of his income in taxes. In fact, he will require borrowing to pay taxes, because 2.5% of accumulated wealth is in nearly all cases much greater than 2.5% of annual earnings. Add living expenses and we see the absurdity of the situation. A flexible approach is therefore needed.

Footnote: This article explores the concept and practicalities of Zakat in the modern world. While there is some sense in accepting personal tax as zakat, there are cases where it may be inappropriate. I think this issue needs our attention. With sincerity we may be able to do the right thing. May God guide us all.