Islamic alternatives to taxation: Kharaj, Jizya and other revenue sources.

In the current world system, the main means of revenue collection is tax. But this tax system has given rise to a huge class disparity, unjust economic exploitation and unlimited state intervention. While the poor people have to be crushed under the millstone of income tax, value added tax (VAT), customs duty, etc., the rich get relief through various loopholes. Instead of this unstable and unjust system, Islam has given a model of a well-organized, fair and balanced revenue system, which is not based on taxes - but on kharaj, jizya, ushar, rikaz, etc.

Kharaj is a type of revenue determined on agricultural land, which after conquering the land occupied by non-Muslims, the Muslim state does not take away the ownership of that land, but rather allows them to use it, and collects land revenue at a fixed rate. It is a type of land rent, which is determined on the basis of production, not a permanent tax. This does not put undue pressure on the farmer, but rather increases the state's income when production increases.

Jizya is a security fee collected from non-Muslim citizens, which is paid in exchange for their life and property, religious practice, protection of places of worship, access to justice, and exemption from military duty. It is not oppression, but an alternative obligation for non-Muslims, similar to the way Muslims are required to pay zakat. The Quran mentions jizya: “Let those who have been given the Book pay the jizya with their own hands and feel humiliated.” (Surah At-Tawbah 9:29). It reflects a social contract from a political perspective — you live in an Islamic state, you are steadfast in your religion, but the state is protecting you, so you pay a small fee.

Ushr is a tax of one tenth (10%) on agricultural products, when the irrigation system is natural (rain-dependent). And if it is artificial irrigation or technology-based, then one twentieth (5%) is collected. Through this, the state plays a balanced role in the agricultural economy. It is not forced, but determined on the basis of production, and it is directly spent on the development of the poor.

Rikaz refers to underground resources, such as minerals, gold and silver mines, etc. These are considered state resources and the state receives revenue at a certain rate on them. In the modern state system, the money received from this sector largely disappears or only goes into the pockets of the powerful, but in Islam, these are seen as deposits of the people.

Then the question arises - how does the state run with this revenue? Islam says that the state should limit its expenses, avoid excesses and the expenses of running the state should be as much as possible without causing hardship to the people. Islamic rulers did not live a royal life. Hazrat Umar (RA) had several holes in his shirt, and he used to say, “I am not Umar, I am the servant of the people”.

In this system, the rich stand by the poor, widows, orphans, disabled and helpless of the society by giving a part of their wealth (zakat, ushr, kharaj, etc.). The state does not exploit; rather, it takes responsibility. The Prophet (peace be upon him) said, “Every one of you is responsible, and he will be questioned about his responsibility.” (Sahih Bukhari)

In the modern state, the state squanders the people’s money — on luxurious offices, grandiose meetings, unnecessary projects, bribery, corruption, foreign trips, etc. These are forbidden in Islam. A state can only collect revenue to meet the needs of the people and protect Islamic ideals.

So, it can be said that the Islamic state system is not a ‘tax haven’ — rather, it is a haven of justice. Here, there is no taxation, there is responsibility; there is no pressure, there is compromise; there is no exploitation, there is participation. In the Islamic system of governance, the state is not a burden on the people, but rather a servant and guardian.

Of course, the prerequisites for implementing this system are honest leadership, accountable governance, and the religious and moral preparation of the people. Because only then can this sacred economy develop when revenue comes voluntarily and expenditure is responsible. The state will be God-fearing, and the ruler will be trustworthy.