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 such alluring schemes for the completion of
its various welfare and commercial projects and for its administration and
The second evil is its 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 honestly carry
out business 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. Their share in the net profit is generally accepted but
they are not given a basic salary. They are neither employed on fixed
working hours nor given other facilities which the industrial workers
receive. In particular, the millions of peasants which inhabit our
villages live and die like slaves serving their masters day and night
throughout their lives.
The fourth evil in it 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, such 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 it 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 accounted for the disruption of our cultural traditions. Not to
mention the fact that congestion and pollution have deprived people of
fresh and invigorating environments.
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 zakāh. 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-al-Māl 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 Khirāj
(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
2. No further domestic or foreign loans should 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
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, 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 zakāh, the following aspects must
always remain in consideration:
i) There is no basis in the Qur’ān and
Sunnah for the condition of making the recipient the owner of the money
given to him (Tamlīk-i-dhātī) imposed by our jurists. Therefore just as
zakāh 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 nisāb
are exempt from zakāh. 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
iii) It should also be borne in mind that
according to the various heads mentioned in the Qur’ān, zakāh is not
merely for the poor and destitute, but under al-‘āmilīna ‘alayhā, it can
be used to pay the salaries of all government officials, under al-mu’alafatu
qulūbīhīm, it can be spent to meet all political expenditures in the
interest of Islam and the Muslim Ummah, under fī sabīl-Allah, it can be
expended on da‘wah ventures and mosques, education and research, Haj and
‘Umrah facilities, Jihād and Qitāl, and other similar projects and
ventures of public and religious welfare, under Ibn-al-sabīl 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 nisāb should be derived on the basis of the rates and
nisāb specified by the Prophet (sws) for land produce.
v) The rates of zakāh 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, zakāh 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 zakāh should be imposed in the country according to
the precepts of the Islamic Sariah:
Zakāh 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.
Zakāh on Produce
Zakāh 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, zakāh has three rates: 5%, 10% and 20%.
5%: On items which are produced by the
interaction of both labour and capital. Examples include:
a) Produce from irrigated lands
b) Industrial produce from factories
c) Services provided, for example airways,
d) Income of all private educational
10%: On items which are produced such that the
major factor in producing them is either labour or capital, but not both.
a) An artist’s creation like paintings
b) The works of scholars and intellectuals
c) All rented houses and various forms of
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.
Zakāh on Animals
All those animals which are bred and reared for the
purpose of trade and business are subject to zakāh. 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