Tag: Fiscal Policy

Outline of an Islamic Fiscal Policy

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Regarding taxation, Islam has laid out clear guidelines: not only is excessive taxation sinful, but even when collecting taxes even from non-Muslims, there should be no element of hardship. For example, Urwah ibn Zubayr narrated that Hisham ibn Hakeem (RA) once saw a tax collector in Homs mistreating some Christian Copts by making them stand under the sun while collecting Jizya. He objected, citing the Prophet Muhammad (PBUH) who said: “Allah will punish those who torment people in this world” (Sunan Abi Dawood 3045).

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Hujjat Ullah ul Balighah

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Shah Waliullah in Hujjat Allah Ul Balighah writes that exchange is of different kinds. Goods for goods or goods for services. There are people with surplus funds and some with deficiency of funds. This requires transfer of resources for need fulfillment without counter value as in Zakat and Sadaqat.

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Inflationary Burden of Taxes

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Despite huge burden of taxes in this budget, 75% of all tax revenues will just go in paying interest on and instalments of previous debt. Last year, government spent around Rs 400 billion in PSDP. Spending every year in PSDP falls short of announcement. This Rs 400 billion is less than even 5% of what we will pay in debt servicing and less than 20% of what we will spend in defense.

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Issues in the Implementation of Ushr in Pakistan

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The major issue is that the government has not been active in the collection of Ushr. Furthermore, historically, it never achieved its true potential in terms of the amount collected due to the trust deficit between the government and the landowners. It is also a fact that some greedy landlords try to evade it. On the other hand, poor knowledge about Ushr among the landowners results in the meager collection of Ushr at the national level.

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