Zakah vs Tax

Zakah and Tax : Conceptual Difference

" Zakah" in the lexicon means a thing which increase gradually. Lisanul Arab, a major book on

the meanings of Arabic words, explain it as "cleanliness, gradual increase, excess, praise". In the

technical Shariah meaning, Zakat means that part of wealth whose payment has been made obligatory by Allah and His Prophet (SM). Similarly, giving of specified part of the wealth who are entitled to get it, is also called Zakat.

Giving this wealth is called Zakat because it cleanses the heart and mind of the payer, it cleanses also his wealth ( in the ultimate economic analysis). It gives increase to the poor in the sense that he gets something for his benefit and his mind is satisfied which is a psychological increase.

On the other hand, Tax is an obligation imposed by the state on the citizens. Taxation is required to cover government expenditure. For a long time, governments imposed taxes to raise revenue only to cover the cost of administration and defence, and in the case of despotic monarchs for personal expenditure of the ruler. Now a days, taxes are no longer levied for defence and administration only, but also for the purpose of furthering social and economic policy of the state.

Similarities and Dissimilarities Between Zakat and Tax

There are some important similarities and dis-similarities between Zakat and Tax.

Similarities

a) Zakat is liable to be collected by force like tax, if the payer does not pay it willingly. This position is applicable where the state compulsorily collects Zakat, and in modern days, has legislated accordingly. The Quran and the Sunnah make it very clear that it is the obligation of an Islamic state which follows Islam to collect Zakat. An important proof in this regard is the decision of Hazrat Abu Bakr (R.A.), the first head of the state of the Islamic Khilafat, to wage war against those who denied to pay Zakat to the state.

b) Zakat collected in an Islamic state has to be kept in the state Treasury, in a separate account, like tax. Zakat is collected by the state through Zakat officials (Amelina Alaiha). However, if Zakat is collected by Non-government organizations or communities, these should be kept safely as in the case of any public fund.

c) Zakat, like tax, is paid though there is no direct and equivalent economic benefit is obtained by the payer This is a different matter that Zakat payer expects return in the life hereafter and the tax payer may receive some service from the state in return but there is no direct co-relation

Dissimilarities

a) There are also important conceptual and other differences between Zakat and Tax. Primarily, Zakat is an Ibadah (act of worship) which Allah has made compulsory on human being, to express gratitude to Him and to obtain His nearness (Taqwa). Tax is not the same thing as Zakat. Tax is a social obligation without having special sense of gratitude to Allah or to obtain nearness to Allah while Zakat is essentially a matter between Allah and His servants, but tax has been primarily a matter between citizens and the state authorities..

b) Zakat is based on Nisab, any wealth below a limit is exempted from Zakat. This is not true in case of many taxes in modern times. Concept of exemption is there in case of tax but it is applicable only when and where the Government or Tax authorities specifically prescribe.

c) Zakat is a permanent and regular system. None can change it in any way. On the contrary, most of the taxes undergo change from time to time.

There is difference in the objective and intent between Zakat and Tax. As Allah has said,

"Take from their wealth Charity (Zakat) so that thereby you make them clean and pure and pray for them. Your Prayer (for them) is a source of comfort for them. Allah is All hearing, All-knowing" ... (Tauba : 103)

The intent of Zakat is to make wealth pure ( in moral sense) and cleanse the heart of human beings from greed and hoarding. The object of Zakat is spiritual as well as economic. But the object of tax is much more mundane and worldly. Tax could never achieve the moral and spiritual objectives of Zakat in any time of history.

There is difference between Zakat and tax in respect of the utilisation of respective fund whereas tax can be spent for any purpose. Zakat is meant to be spent for specified objectives which are mainly provision for the poor (poverty alleviation), to free debtors from the debt, to free the people in bondage, for the way farer and for the good of the people i.e. Fi Sabi Lillah.