The Zakat Question in Islamic Public Finance

Description

When discussing matters of public finance and fiscal policy tools, it is common in modern Islamic economics discourse to find zakat referred to as a dedicated state tax. Debate often revolves around empirical questions of whether such a tax in fact alleviates poverty and reduces economic inequality. A less discussed but equally important question however, is a prior conceptual one: can zakat be classified as a tax at all? Obviously, the answer to this prior question has significant implications for modern Islamic public finance. In this paper, I outline the main lines of argument for treating zakat as a state tax and then problematise these arguments. In brief, I argue that the primary religious sources do not conclusively endorse treating zakat as a state tax; the historical record indicates much variation in how zakat is treated by state authorities; and on the basis of Shafi’i fiqh, there is a substantive disanalogy between zakat and a state mandated tax. I then briefly review the legal status of zakat in Australia, point to some weaknesses with this approach, but conclude that a couple of possible avenues for addressing these weaknesses would be highly problematic either in terms of secular law or the Shariah.

Period	30 Nov 2023
Event title	Symposium on Islamic Finance in Australia
Event type	Conference
Location	Canberra, AustraliaShow on map
Degree of Recognition	International