Taxation and Its Ruling in Islamic Sharia: A Comprehensive Analysis

Abstract

   This scholarly study delves into a critical subject—the jurisprudential ruling regarding taxation within the framework of Islamic Sharia, aligning with contemporary economic perspectives. Given the divergent opinions surrounding this issue, its significance cannot be overstated. The research sheds light on both the viewpoints that conform to Islamic Sharia principles and those that diverge from them.

   To meticulously examine the ruling on taxes within the context of Islamic Sharia, particularly in light of contemporary economic paradigms, it becomes imperative to establish precise definitions for these taxes. Consequently, the initial chapter succinctly outlines modern tax structures, facilitating informed decisions regarding their legal status. Clarity regarding the essence and specifics of taxation is essential for rendering a well-founded judgment.

   The second crucial aspect involves investigating whether Islam provides specific sources to support the budget of an Islamic state. Are these sources considered tawqifi (determined by divine legislation), or do they allow room for ijtihad (independent juristic reasoning)? Furthermore, can additional sources beyond those explicitly mentioned in Sharia texts be incorporated? This research underscores that while Sharia indeed designates certain funding sources for the Islamic government, matters related to transactions and trade fall within the realm of ijtihad. Consequently, during the caliphate of Hazrat Umar bin Al-Khattab (may Allah be pleased with him), supplementary sources were introduced. In light of this, the study concludes that, absent any Sharia impediments, levying taxes to finance the Islamic government aligns with the inherent nature of Sharia.

   The third significant issue is that one of the key challenges related to the imposition of forced or compulsory taxes by the government within the framework of Sharia law is the prohibition against taking someone’s property without their consent. Such forced taxation is considered impermissible according to Islamic principles.

   The fourth chapter of this study delves into the conditions under which the Sharia-based obstacle to taxation—specifically, the act of taking people’s property without their consent—can be legally removed. The central question revolves around the permissibility of taxation once this barrier is eliminated. Conversely, when the obstacle persists, the imposition of taxes remains unlawful. Our research concludes that this barrier can be effectively removed in the following two scenarios:

   First, the concept of “immense necessity” within legal discourse pertains to exceptional circumstances in which a legitimate government is authorized to treat individuals’ property as permissible for state purposes.

   Second, in the context of non-emergency scenarios, the permissibility of taxation hinges upon specific legal conditions. Individuals must willingly commit to paying taxes through their elected representatives, and this commitment constitutes a legally binding promise. Additionally, a comprehensive synoptic tax payment contract should be established between the government and its citizens. Within this detailed contract, the annual tax amount must be meticulously determined, specifying the conditions and criteria for taxation. Each citizen should receive a copy of this contract, ensuring transparency and accountability. It is imperative that tax rates and charging mechanisms are clearly defined in accordance with legal and ethical norms.

   Thus, taxation is an indispensable instrument for the advancement of nations and the effective functioning of governments. Without adequate revenue from taxes, countries face significant limitations in their ability to address societal needs, invest in infrastructure, and promote economic growth. However, this critical fiscal function must align with Sharia principles, particularly for Muslim governments.