7.1 Facts About the Economic System
Islam has a unique system of taxation where there is no taxation of the poor. There are only three types of regular taxes levied from those people who are able to pay:
1. Jizyah - Is a tax on mature male non-Muslim citizens who are able to pay it. This is much less than any tax on Muslim citizens.
2. Ushr - Is a tax levied on unconquered land under the jurisdiction of the State, at the rate of one tenth of the produce if the land is irrigated by rain, or one twentieth if it is artificially irrigated.
3. Kharaj - Is a tax levied on conquered land, whose rate is fixed by the Khaleefah.
There are no income taxes.
There is no Value Added Tax (VAT).
There are no Death Duties.
There is no Road Tax.
All these examples are included among the taxes in the West where it is the poor that suffer the most.
The Khaleefah ‘Umar ibn Abdul Aziz at one stage could not find a poor person to give zakat to during his rule (7th Century CE).
In the entire history of Spain, it was economically at its most prosperous during the period of Islamic rule. Never before or since has it been so successful.
Under Islam, Africa sent food to relieve famine in Madinah. The Khaleefah - ‘Umar ibn al-Khattab sent the following letter to Amr ibn al-‘A’as, the governor of Egypt regarding the means of transporting the supplies :
“Arrange to dig the canal from the River Nile up to the Sea even if you have to spend the entire treasury of Egypt in the undertaking.”.
Zakat is not part of the Islamic economic system.
Public resources such as sources of water like rivers and lakes, sources of energy like electricity, and public utilities like parks, roads and railways cannot be privatised according to the wishes of the government. They remain public property as originally classified by Islam according to their nature. They will always remain public and cannot be owned by individuals who may charge excessively and prevent the vital requirements of the people getting to them, as happens in the West.