5 Powerful proofs why tax evasion is halal in Islam
26/04/2020
Income tax is a tax levied by a government of a country on an individual or a company on their legitimate hard earned monies. There are many layers on these tax system and several other forms of taxes are also levied in various other names such as capital gain tax which is a tax levied on a person for his earnings through the selling of assets and corporate tax which is levied on companies.
Income tax is a form of pondering the money from the pockets of a hard earned individual and this clearly has caused distressing situations for individuals and an unnecessary burden on families that are earning a living through them. There are many forms of income taxes apart from the two I have mentioned and all of them are devised to plunder the hard earned money of an individual by force through legislative means. Islam is a religion that gives individual freedom and choices and in this article I hope to inshaAllah discuss why income tax is haram in Islam and what are the solutions using top five scholarly points in the light of the Quran and the authentic hadiths.
1. Income Tax in the Quran and the Sahih Hadiths
To levy a tax on a person's finance and belongings is haram because this is injustice on a Muslim. Allah (swt) says in the Quran,
“O you who believe! Eat not up your property among yourselves unjustly”
(Al-Quran-4:29)
A Muslim ruler should not do injustice to anyone by taking money as taxes from the hard earned money of people. In a way, imposing income taxes is a form of extortion because you are taking the personal wealth of an individual by using legislative force. Some might argue that income tax is a form of service charge by the government for its service to the public it provides. The problem here is services are in general and not specific to individual needs and even in that scenario the government can impose other non-personal taxes but income taxes are taken by the government stating that the rich should be forced to pay taxes. The rich are not obliged to pay their hard earned money to the government and this will discourage people becoming successful financially. The prophet (sal) said,
“It is not permissible to take the wealth of a Muslim except with his consent.”
(Musnad Ahmed-graded sahih by Albani)
Imposing income tax is a tax taken by force without the consent of a Muslim. Imposing an income tax becomes halal only if it is done for a necessity as in the case of countries we see today which has little revenue due to war and poverty.
2. Maks is a Form of Tax That is Haram
Another form of direct or indirect income tax is duty tax which is imposed on goods or services. This form of tax is also a form of deception to rob the hard earned money of the people be it rich or poor. Maks is a form of additional tax and the prophet (sal) said,
“No one who collects the Maks will enter Paradise.”
(Abu Dawud-graded daif (weak) by Albani. This hadith was narrated in Mustadrak al Hakim and imam Hakim graded it Sahih)
Buraydah (rali) said:
A woman of Ghamid came to the Prophet (sal) and said: I have committed fornication. He said: Go back. She returned, and on the next day she came to him again, and said: Perhaps you want to send me back as you did to Ma’iz b. Malik. I swear by Allah, I am pregnant. He said to her: Go back. She then returned and came to him the next day. He said to her: Go back until you give birth to a child. She then returned. When she gave birth to a child, she brought the child to him, and said: Here it is! I have given birth to it. He said: Go back, and suckle him until you wean him. When she had weaned him, she brought him (the boy) to him with something in his hand which he was eating. The boy was then given to a certain man of the Muslims and he (the Prophet) commanded regarding her. So a pit was dug for her, and he gave orders about her and she was stoned to death. Khalid was one of those who were throwing stones at her. He threw a stone at her. When a drop blood fell on his cheeks, he abused her. The Prophet (sal) said to him: Gently, Khalid. By Him in whose hand my soul is, she has reported to such an extent that if one who wrongfully takes extra tax (Maks) were to repent to a like extent, he would be forgiven. Then giving command regarding her, prayed over her and she was buried."
(Sahih Muslim and Abu Dawud-graded sahih by Albani)
In this hadith the prophet (sal) gave the example of a Maks collector and this shows the severity of it. Taking an extra tax such as a custom duty is allowed if it is done for a necessity. Allah (swt) said,
“The way (of blame) is only against those who oppress men and rebel in the earth without justification; for such there will be a painful torment”
(Al-Quran-42:42)
3. Zakat is Different from Income Tax
Often zakat and income tax have been misunderstood. Zakat is an obligatory form of charity for those who are capable of paying it. Zakat is from Allah (swt) and income taxes are from a government. Zakat is to help the poor, needy and those who need help whereas income tax is taken as a state service tax in general. Zakat is imposed on the principle of mercy and in a way to not cause any hardship to the giver whereas income taxes are mostly taxes that are imposed on people who are also poor and is a form of hardship.
4. Difference Between Income Tax and Other Islamic Taxes
Islam does not forbid taxes in general. Taxes that are levied to cause hardship or to take away wealth from a person unjustly is haram and income tax is one of them. Below are some form of taxes which are legitimized in Islam
Jizyah
Jizyah is a form of tax levied on non-Muslims who live under Islamic law permanently. Like all the other taxes imposed under the Shariah, the Jizyah tax was charged in a merciful manner and the person who pays it should have attained puberty.
Muadh bin Jabal (rali) narrated,
"The Messenger of Allah (sal) sent me to Yemen and he commanded me to take the Jizyah from everyone who has reached the age of puberty-one Dinar- or its equivalent in Ma’afiri (garments of Yemeni origin).’ Related by the three Imams. (Bulugh al ma ram-Ibn Hibban and Al-Hakim graded it as Sahih)
Jizyah should not be levied in a way that causes hardship upon non-muslims.
Urwah bin Al Zubair said “Hisham bin Halim bin Hizam found a man who was the governor of Hims making some Copts stand in the sun for the payment of Jizyah. He said “What is this?” I heard the Apostle (sal) as saying “Allaah Most High will punish those who punish the people in this world.”
(Abu Dawud-graded sahih by Albani)
Hisham bin Hakim bin Hizam happened to pass by some (non-Arab) farmers of Syria who had been made to stand in the sun, and olive oil was poured on their heads. He said:
"What is the matter?" He was told that they had been detained for the non-payment of Jizyah. (Another narration says that they were being tortured for not having paid Al-Kharaj). Thereupon Hisham said: "I bear testimony to the fact that I heard the Messenger of Allah (sal) saying, 'Allah will torment those who torment people in the world."' Then he proceeded towards their Amir and reported this Hadith to him. The Amir then issued orders for their release."
(Muslim)
Umar (rali) said,
"I urge him to take care of those non-Muslims who are under the protection of Allah and His Messenger in that he should observe the convention agreed upon with them, and fight on their behalf (to secure their safety) and he should not over-tax them beyond their capability."
(Sahih al Bukhari)
The Jizyah tax is only imposed on the non-muslims who can afford to pay and should not be forced. The Jizyah tax is taken as a way to protect the non-muslims unlike nowadays where modern governments tax people for everything, this is a very fair tax.
Apart from Jizyah there were other forms of taxes such as Kharaj tax which is a form of land tax, Ushr is a tax on muslims on irrigated land 10% tax on the harvests of irrigated land and 10% tax on harvest from rain-watered land and 5% on Land dependent on well water and the other tax was Fai tax which is war booty. All of these taxes are taxes that do not drain the poor and the difference between the Islamic taxes and income tax is that income tax is levied on the poor and the needy and this is a form of oppression and extortion.
5. Alternative Solutions for Income Tax
The argument presented by a lot of people is that it is impossible for a government to survive without imposing income taxes. First of all we must understand that Islam is a religion of ease and not all Muslim rulers can practically not impose income tax. Saudi Arabia for an example is an oil rich Muslim country and can afford to stop imposing income taxes or any other related that is not applicable to poor Muslim countries such as Somalia or Bangladesh. In Islam there is a concept called "dharoorah” where necessity dictates exceptions. Below are some solutions for income tax,
1. Imposing income tax for a necessity if the Muslim government is poor and unable to sustain itself due to reasons such as war, famine, poverty etc.
2. Imposing Islamically acceptable taxes such as Jizyah, Kharaj, Ushr, Fai etc.
3. Implementing government owned manufacturing plants and businesses.
4. Doing international trade such as exporting goods to other countries.
5. Starting innovative business strategies such as e-commerce websites such similar to amazon or Ali Baba.
6. Using government owned land and resources such as oil, cobalt, mining, gas to increase revenue of the government.
C.J Ahmed
Income tax is a tax levied by a government of a country on an individual or a company on their legitimate hard earned monies. There are many layers on these tax system and several other forms of taxes are also levied in various other names such as capital gain tax which is a tax levied on a person for his earnings through the selling of assets and corporate tax which is levied on companies.
Income tax is a form of pondering the money from the pockets of a hard earned individual and this clearly has caused distressing situations for individuals and an unnecessary burden on families that are earning a living through them. There are many forms of income taxes apart from the two I have mentioned and all of them are devised to plunder the hard earned money of an individual by force through legislative means. Islam is a religion that gives individual freedom and choices and in this article I hope to inshaAllah discuss why income tax is haram in Islam and what are the solutions using top five scholarly points in the light of the Quran and the authentic hadiths.
1. Income Tax in the Quran and the Sahih Hadiths
To levy a tax on a person's finance and belongings is haram because this is injustice on a Muslim. Allah (swt) says in the Quran,
“O you who believe! Eat not up your property among yourselves unjustly”
(Al-Quran-4:29)
A Muslim ruler should not do injustice to anyone by taking money as taxes from the hard earned money of people. In a way, imposing income taxes is a form of extortion because you are taking the personal wealth of an individual by using legislative force. Some might argue that income tax is a form of service charge by the government for its service to the public it provides. The problem here is services are in general and not specific to individual needs and even in that scenario the government can impose other non-personal taxes but income taxes are taken by the government stating that the rich should be forced to pay taxes. The rich are not obliged to pay their hard earned money to the government and this will discourage people becoming successful financially. The prophet (sal) said,
“It is not permissible to take the wealth of a Muslim except with his consent.”
(Musnad Ahmed-graded sahih by Albani)
Imposing income tax is a tax taken by force without the consent of a Muslim. Imposing an income tax becomes halal only if it is done for a necessity as in the case of countries we see today which has little revenue due to war and poverty.
2. Maks is a Form of Tax That is Haram
Another form of direct or indirect income tax is duty tax which is imposed on goods or services. This form of tax is also a form of deception to rob the hard earned money of the people be it rich or poor. Maks is a form of additional tax and the prophet (sal) said,
“No one who collects the Maks will enter Paradise.”
(Abu Dawud-graded daif (weak) by Albani. This hadith was narrated in Mustadrak al Hakim and imam Hakim graded it Sahih)
Buraydah (rali) said:
A woman of Ghamid came to the Prophet (sal) and said: I have committed fornication. He said: Go back. She returned, and on the next day she came to him again, and said: Perhaps you want to send me back as you did to Ma’iz b. Malik. I swear by Allah, I am pregnant. He said to her: Go back. She then returned and came to him the next day. He said to her: Go back until you give birth to a child. She then returned. When she gave birth to a child, she brought the child to him, and said: Here it is! I have given birth to it. He said: Go back, and suckle him until you wean him. When she had weaned him, she brought him (the boy) to him with something in his hand which he was eating. The boy was then given to a certain man of the Muslims and he (the Prophet) commanded regarding her. So a pit was dug for her, and he gave orders about her and she was stoned to death. Khalid was one of those who were throwing stones at her. He threw a stone at her. When a drop blood fell on his cheeks, he abused her. The Prophet (sal) said to him: Gently, Khalid. By Him in whose hand my soul is, she has reported to such an extent that if one who wrongfully takes extra tax (Maks) were to repent to a like extent, he would be forgiven. Then giving command regarding her, prayed over her and she was buried."
(Sahih Muslim and Abu Dawud-graded sahih by Albani)
In this hadith the prophet (sal) gave the example of a Maks collector and this shows the severity of it. Taking an extra tax such as a custom duty is allowed if it is done for a necessity. Allah (swt) said,
“The way (of blame) is only against those who oppress men and rebel in the earth without justification; for such there will be a painful torment”
(Al-Quran-42:42)
3. Zakat is Different from Income Tax
Often zakat and income tax have been misunderstood. Zakat is an obligatory form of charity for those who are capable of paying it. Zakat is from Allah (swt) and income taxes are from a government. Zakat is to help the poor, needy and those who need help whereas income tax is taken as a state service tax in general. Zakat is imposed on the principle of mercy and in a way to not cause any hardship to the giver whereas income taxes are mostly taxes that are imposed on people who are also poor and is a form of hardship.
4. Difference Between Income Tax and Other Islamic Taxes
Islam does not forbid taxes in general. Taxes that are levied to cause hardship or to take away wealth from a person unjustly is haram and income tax is one of them. Below are some form of taxes which are legitimized in Islam
Jizyah
Jizyah is a form of tax levied on non-Muslims who live under Islamic law permanently. Like all the other taxes imposed under the Shariah, the Jizyah tax was charged in a merciful manner and the person who pays it should have attained puberty.
Muadh bin Jabal (rali) narrated,
"The Messenger of Allah (sal) sent me to Yemen and he commanded me to take the Jizyah from everyone who has reached the age of puberty-one Dinar- or its equivalent in Ma’afiri (garments of Yemeni origin).’ Related by the three Imams. (Bulugh al ma ram-Ibn Hibban and Al-Hakim graded it as Sahih)
Jizyah should not be levied in a way that causes hardship upon non-muslims.
Urwah bin Al Zubair said “Hisham bin Halim bin Hizam found a man who was the governor of Hims making some Copts stand in the sun for the payment of Jizyah. He said “What is this?” I heard the Apostle (sal) as saying “Allaah Most High will punish those who punish the people in this world.”
(Abu Dawud-graded sahih by Albani)
Hisham bin Hakim bin Hizam happened to pass by some (non-Arab) farmers of Syria who had been made to stand in the sun, and olive oil was poured on their heads. He said:
"What is the matter?" He was told that they had been detained for the non-payment of Jizyah. (Another narration says that they were being tortured for not having paid Al-Kharaj). Thereupon Hisham said: "I bear testimony to the fact that I heard the Messenger of Allah (sal) saying, 'Allah will torment those who torment people in the world."' Then he proceeded towards their Amir and reported this Hadith to him. The Amir then issued orders for their release."
(Muslim)
Umar (rali) said,
"I urge him to take care of those non-Muslims who are under the protection of Allah and His Messenger in that he should observe the convention agreed upon with them, and fight on their behalf (to secure their safety) and he should not over-tax them beyond their capability."
(Sahih al Bukhari)
The Jizyah tax is only imposed on the non-muslims who can afford to pay and should not be forced. The Jizyah tax is taken as a way to protect the non-muslims unlike nowadays where modern governments tax people for everything, this is a very fair tax.
Apart from Jizyah there were other forms of taxes such as Kharaj tax which is a form of land tax, Ushr is a tax on muslims on irrigated land 10% tax on the harvests of irrigated land and 10% tax on harvest from rain-watered land and 5% on Land dependent on well water and the other tax was Fai tax which is war booty. All of these taxes are taxes that do not drain the poor and the difference between the Islamic taxes and income tax is that income tax is levied on the poor and the needy and this is a form of oppression and extortion.
5. Alternative Solutions for Income Tax
The argument presented by a lot of people is that it is impossible for a government to survive without imposing income taxes. First of all we must understand that Islam is a religion of ease and not all Muslim rulers can practically not impose income tax. Saudi Arabia for an example is an oil rich Muslim country and can afford to stop imposing income taxes or any other related that is not applicable to poor Muslim countries such as Somalia or Bangladesh. In Islam there is a concept called "dharoorah” where necessity dictates exceptions. Below are some solutions for income tax,
1. Imposing income tax for a necessity if the Muslim government is poor and unable to sustain itself due to reasons such as war, famine, poverty etc.
2. Imposing Islamically acceptable taxes such as Jizyah, Kharaj, Ushr, Fai etc.
3. Implementing government owned manufacturing plants and businesses.
4. Doing international trade such as exporting goods to other countries.
5. Starting innovative business strategies such as e-commerce websites such similar to amazon or Ali Baba.
6. Using government owned land and resources such as oil, cobalt, mining, gas to increase revenue of the government.
C.J Ahmed