Sharia Taxation: Dilemma & Crisis of Muslim World
Huzaima Bukhari & Dr. Ikramul Haq
Deliberations of Third Technical Conference of the Association of Tax Authorities of Islamic Countries (ATAIC) in Islamabad (November 22-25), it is officially claimed by our Central Board of Revenue (official hosts), will certainly help in promoting “cooperation among the tax administrators of Muslim countries”. The occasion will surly offer an opportunity to tax collectors to learn from the experiences of each other, but it cannot help Muslim Ummah to devise an Islamic approach towards tax policy and administration on the basis of principles enshrined in the holy Quran and Sunnah.
ATAIC at the moment have about 20 members, namely, Bangladesh, Brunei Darussalam, Comoros, Egypt, Guyana, Indonesia, Iran, Iraq, Jordan, Kuwait, Lebanon, Malaysia, Morocco, Pakistan, Qatar, Senegal, Sierra Leone, Sudan, Tajikistan and Yemen. It is considered as the most active organisation of tax administration of the Islamic world.
The ATAIC was established and launched in Putrajaya, Malaysia on October 15, 2003, where its first Conference was held. The second meeting was held at Tehran, Iran and the third Conference is now being held at Islamabad, Pakistan. The mission of the ATAIC is “to facilitate the improvement of tax administration and promote Sharia Taxation with particular reference to Zakat within the Islamic countries, in order to meet the challenges/changes rapidly taking place in the world”.
Islamabad Conference is to highlight the following three topics as mentioned at official website, http://www.ataic-tax.org:
Topic 1
Strategies for resource mobilization through:
- Increase in Tax to GDP ratio and
- Expansion in Tax base
Countries List
Egypt
Indonesia
Malaysia
Yemen
Topic 2
Promotion of voluntary compliance especially among small traders and tax audit as an effective deterrence for tax compliance
Countries List
Indonesia
Malaysia
Jordon
Topic 3
Sharia taxation with particular reference to Zakat.
Country List
Malaysia
The Muslim world is faced with serious problems of income inequalities and injudicious distribution of wealth amongst the various segments of society. Even in the oil-rich countries, the divide between the poor and the rich is wide. It is unfortunate that even in the wake of post colonial period, the Muslim rulers and thinkers have failed to evolve a commonly-accepted Islamic tax system in the light of instructions contained in the holy Quran and Sunnah to meet the requirements of the present day world.
There exists unimaginable sectarian divisions, regional and ethnic animosities within the Muslim world. On the one hand, Muslims at large keep on telling the world that they profess faith in one God, one Book and one Prophet and on the other they even do not pause for a while in killing their own brothers and sisters in the name of self-assumed interpretations of various injunctions contained in the holy Quran itself. In these circumstances, it appears unlikely that through the forum of ATAIC any meaningful change can be made in the existing tax systems and their administration in the Muslim States to achieve the most-sought-after goal of establishing a truly Islamic egalitarian society, in which the tax system can play a major role to ensure equitable distribution of wealth. The modern day Western civilization has attained social and economic justice—though not completely but to a satisfactory level—by adopting principles of social mobility, opportunities for all, democratic culture and rule of law. All these elements are completely or largely missing in majority of the Muslim States.
The issue of improvement of tax administration and introduction of Sharia taxation with particular reference to Zakat “to meet the challenges/changes rapidly taking place in the world” cannot be seen in isolation. This goal cannot be achieved without first establishing democratic institutions and culture. The tragedy with Muslim rulers and their bureaucracies is that they want to do everything without the involvement of the people. In a true democratic dispensation, such programmes of change are unthinkable without the active participation and support of the people for which they are meant. Since the rulers of Muslim World have little respect for democratic culture and values, they try to impose Western models without following their system to the core. They do not even know whether these models can be introduced in their societies as such, without suitable modifications to conform to local conditions and requirements. The result is obvious that they utterly fail to implement foreign models because of lack of people’s consent, motivation and participation and due to corrupt, incompetent and inefficient bureaucracies, which are not accountable to any public institutions. Tax officials are no exceptions.
In this scenario, the role of ATAIC, or for that matter any Muslim organisation (OIC is a classic example) cannot be of substantial significance to bring about any meaningful change in the Muslim societies that are in a perpetual state of conflict and facing the worst possible decadence in every field of life. Clergy-ridden, despotically-ruled and badly-governed Muslim societies have no future as they have lost the very basic quality of adhering to the higher values of justice and rule of law. If they want to regain the strength they once enjoyed in history, they will have to change themselves by getting rid of monarchs, despotic rulers and religious obscurantists. This is the dilemma of every Muslim State today; they want to regain past glory without realizing that the world today requires excellence in research and technology, which is not possible in undemocratic environments, for lack of freedom of thought and tolerance towards other thoughts.
In their taxation systems. the Muslim governments have no respect for redistribution of wealth and the sole aim is to collect more and more for the rulers of the day. In Pakistan, the presumptive tax system is the worst example of this phenomenon and in the presence of this undeniable fact, tax officials feel no shame in claiming to promote Sharia taxation(sic)! Most of the tax administrators, attending the conference (perhaps more for the sake of having a good time), even do not know the basic precepts of Sharia what to talk of devising a tax system based on it.
In the Central Board of Revenue (CBR) of Pakistan not a single research study has been done by any officer on the topics that are to be discussed in the Conference. CBR’s self-styled, self-claimed tax experts are ordinary tax collectors who do not even possess dependable knowledge of tax codes they are supposed to administer let alone, tell the Muslim Ummah what is good for them! Tax policy issues should be debated and decided in the Parliament by the representatives of people after taking proper advice of experts in the field. Everywhere in the world, universities are the main source from where the latest research—for framing laws and policies—on a particular subject emanates. In the Muslim World, our rulers want the tax collectors (who do not possess knowledge or expertise) to prepare tax codes and policies for us.
In any democratic society, this will certainly be considered an encroachment on the rights of people, but in the Muslim World this is an accepted norm and the sole prerogative of bureaucrats, as kings and dictators have no choice but to depend on them. This is the root cause of decadence of Muslim Ummah and yet they want to know where the problem lies! In the entire Muslim World there is not a single institute where research on international taxation or so-called Sharia taxation is conducted. The non-existence of Centre of Excellence on Taxation anywhere in the Muslim World is the real issue. Muslim rulers, instead of wasting colossal money on such useless conferences, should establish research institutes, if they are really serious to make their tax laws Sharia-compliant.
_______________________________
The writers, leading tax advisers and authors of many books on tax laws, work for a multi-disciplinary law firm HUZAIMA & IKRAM (www.huzaimaikram.com) and teach at Lahore University of Management Sciences (LUMS).