Adopt Zakat, Not Hudud

By M. Bakri Musa

Malay politicians fall all over themselves in advocating hudud, the Islamic penal laws. That is less an expression of their commitment to Islam, more blatant pandering to Muslim voters.

If these leaders are truly committed to advancing the cause of Islam, there is a more productive strategy: make zakat mandatory. Being one of the pillars of our faith, zakat is more defining of Islam. It is even ahead of performing the Hajj. Adopting zakat would bring the country closer to an Islamic state symbolically and operationally, certainly much more so than implementing hudud.

Creatively managed, zakat could be a formidable force for economic and social development; it would also highlight what is right about Islam. Currently in Malaysia and in many Muslim countries, mobilizing zakat remains only a potential. As the Halal Journal noted, “…[I]n the context of the Malaysian economy, zakat has not played a significant role ….” There is also a dearth of economic research on zakat. The recently convened United Malay Economic Action Council, presumably comprising luminaries in commerce and economics, has not even explored the issue.

Zakat is positive, charitable and “do good” aimed at alleviating human suffering; hudud is punitive, barbaric, and vengeful, aimed at maiming the human body and spirit. Zakat expresses the merciful and benevolent aspects of Islam; hudud conjures nothing but sadistic and repulsive images.

The most frequently invoked phrase in Islam is, Bis Millah Hir Rahman Nir Rahim (In the name of Allah, Most Beneficent, Most Merciful!). Zakat resonates more with these two pristine qualities of Allah (beneficent and merciful); hudud is the antithesis.

Practical Reasons for Mandating Zakat

A more pragmatic reason for mandating zakat is that as Islam is under state jurisdiction, the revenue would accrue to the state, in effect be a new tax thus enhancing states’ authority. A jurisdiction with no authority to tax has little power. With our federal system, states have little taxation power except for land tax and a few miscellaneous small-ticket items. States are thus dependent on the central government. Where the federal and state governments are from different parties as with Kelantan, the state would be at the mercy of the federal government. Zakat would change the fiscal and thus political dynamics in favor of the state.

One snag is that states are ill equipped to collect taxes. This could be solved by contracting with the federal Inland Revenue Service to collect zakat. That should pose minimal extra administrative costs as the IRS is already collecting income and other taxes. Many Canadian provinces have such an agreement with their central government. Such a scheme would also coordinate the two systems especially considering that zakat is treated as a tax credit. Even in secular America zakat is tax deductible when given to a registered charitable entity.

Zakat Disbursement

States would have to enact legislations consonant with the Koran and hadith on the disbursement of those funds, as well as the penalties for failure to pay. The penalties should be on par with failing to pay income tax. At the very least those in arrears should be denied a Hajj and umrah visa.

Zakat cannot go into the general fund, but of the eight categories of distribution proscribed in the Koran, five would be considered charity; the remaining could be considered as investment in people.

One, riqab, securing the freedom of slaves, can be interpreted metaphorically as emancipating the people. Thus zakat funds have traditionally been used for religious schools; I see no reason why that cannot be broadened to other schools as with building laboratories and libraries.

Providing job opportunities is also a form of emancipation. The prophet used to build bazaars so traders would have a place to conduct commerce, thus providing employment opportunities as well as service and merchandise for the community.

Our pasar minggu (farmers’ market) where most of the traders are Malays lack even the basic amenities. Provide water supply, and that would greatly enhance their hygienic practices, to the benefit of their customers. With power those hawkers could refrigerate their perishables, thus enhancing food safety and reducing wastage. Why not use zakat to build these clean, well-equipped bazaars as with the prophet’s time? The area outside the Kaaba was the scene of intense commercial activity during his time. It still is, especially during the pilgrimage season, providing precedence in combining pious pursuits with economic ones.

Zakat could be combined with the “one village, one industry” initiative by funding these enterprises, thus providing jobs for the villagers. That would be more dignified than simply giving the poor handouts.

The building of public infrastructures as marketplaces and funding village enterprises can be viewed as freeing our people from enslavement, the enslavement of having no jobs, no income, and most of all, no hope.

Zakat could also be used to build hostels on mosque properties. Besides being a source of revenue, it would also fulfill zakat’s mandate of helping travelers (Ibnus sabil). Such hostels would be especially useful for villagers and others not comfortable with commercial hotels.

The other legitimate use of zakat is for fisabillillah, jihad in the ways of Allah. That too is a broad mandate. Creatively interpreted, those fighting corruption, injustices, and poverty could be said to be engaging in fisabillillah and thus deserving zakat support.

Showcasing Zakat Versus Income Tax

Having income tax side by side with zakat would be an excellent field experiment to compare the two systems. There are definite philosophical and practical differences between the two.

Zakat meets the economist’s criteria of an efficient tax system. Its flat rate means the redistribution aspect is minimal, very unlike the “progressive” income tax. By casting the net wide and shallow instead of narrow and deep as with income tax, zakat maximizes revenue. Zakat’s simplicity, low rate and minimal deductions discourage cheating by underestimating asset value. It also spares the need for expensive tax accountants and attorneys.

In terms of equity, consider that half of Americans do not pay any income tax; the figure is even lower in Malaysia. With zakat, the figure should be considerably higher. After all you are liable for zakat if your personal asset exceeds nisab, the value of three ounces of gold. You have to be destitute to avoid zakat.

As for equity, at present sultans do not pay any income tax; with zakat they have to. I wonder how much zakat that dentist-cum-politician pays for his mega mansion or Rosmah for her ring! With our secular income tax they owe nothing. That is the best demonstration of the justness of Islam.

Zakat is incumbent only upon individuals, not corporations; there is no provision for that in the Koran and hadith. That is not surprising as the concept of the corporation is recent. I do not see why corporations should not be subjected to zakat. However, considerable intellectual work needs to be done with respect to valuation of assets, in particular “goodwill” and intellectual properties.

Adopting zakat would give so many opportunities to effect good, reason enough for our leaders to focus on it rather than on hudud. Obsession with hudud only distracts them from facing the real challenges facing our people.