Dr. Waleed Arab Hashim

Okaz

Zakat or almsgiving, the fifth pillar of Islam, is not at all the same as taxes, although some people mistakenly think that they are two sides of the same coin.

 

To elaborate, I will give a quick example of two brothers who both inherited a million Saudi riyals each. The first brother worked day and night and was able to make half a million riyals in profit while the second brother kept his money in the bank for a whole year.



The first brother is obligated to pay the tax authority not less than 30 percent of his income, that is SR150,000 of the SR500,000 profits. The second brother does not have to pay the authority anything because he did not invest the money. As you can see, the tax system rewarded the second brother for not working while it took part of the profits of the first brother who worked hard. It looks like the system rewards those who do not work and punishes those who do. It should also be noted that the higher the profits are, the higher the tax.



In some European countries, income tax exceeds 90 percent. That is to say, those who make SR100 in addition to their original income will have to pay SR90 to the tax authority and can keep only SR10. How can people work hard when they know that most of their profits will go to the tax authority?



Zakat is different because the same percentage is deducted from everyone. In the case of the two brothers who each inherited SR1,000,000 with one working hard and the other depositing the money in the bank, both have to pay 2.5 percent every year whether or not they have invested the money.



So any Muslim who deposits his money in the bank and does not do anything with it will see that his wealth will dwindle over the years because he has to pay zakat. The best option is to invest this money.



The huge difference between zakat and tax has a strong impact on the economy. The higher the production, the more goods and commodities there will be in the market. The abundance of goods will decrease prices. Taxes do the opposite; they increase production costs and the price of commodities.