economic system in islam

Economic System in Islam Overview

State Property◦ Arms industry, Steel industry

Public Property◦ Energy, Rivers, Transport etc.

Private Property◦ Home, Cars, Industry etc.

Types of Property

Uncultivated land for over 3 years, is taken by State and redistributed.

A citizen can take any amount of land which is not owned by anyone in order to fence it and start its cultivation

Loans available from bayt-al-Mal

Land Reforms

Revenue: Zakat, Jizya, Khiraj, Ushr

Emergency Tax◦ Limited duration only

State Business

Public Business (Public property)◦ Reinvested in expansion

Revenue Generation

Taxation System

Khilafah Capitalism

- No taxes on common man- Tax on Savings

GST Tax, Income Tax, Withholding tax, toll tax etc. are all haram and will be abolished.

-There will be following permanent sources of revenues in an Islamic State:a. Al-Kharajb. Al-Jizyac. Al-Ushrd. The fifth of Al-Rikaz (hidden

treasures / minerals.

-Taxes on common man- Tax on income

63.93% (Rs 840 Billion) of revenue of Pakistan comes from taxes on the people as per the budget 2006-2007 figures.

Generated revenue goes in different accounts.

Revenue spent according to needs of area and not based on its productivity.

Revenue Expenditure

Backed by Gold/Silver Not based on FIAT model. Does not loose value over time. States economy is not effected by fall in

value of foreign currency.

Currency

Interest not allowed. No alternatives to batil /Fasiq methods People will:

◦ Take money out and invest◦ Keep money in homes◦ Keep money in Financial Institutes

Financial Institutes

Interest◦ Banking, Loans, Prize bonds,

Gambling◦ Commercial gambling, Lucky draws, stock

exchange.

Result◦ Investment in real economy.

Prohibtions

Man is not viewed merely as a unity of economic value

Capitalist view man as unit of economic value

Capitialism:◦ Freedom of Capital, Freedom of ownership

Economic Value

Flow of knowledge cannot be restricted. Seller cannot restrict ownership of product

sold.

Technology, Books etc. cannot be copyrighted.◦ Expensive medicine today. Khilafah will reduce its

cost.◦ Attract scientists from around the world.

Trademarks allowed.

Patents