Pakistan Institute of Development Economics



A Macroeconomic Taxation Model for an Islamic Economy

Present day Islamic states are called for performing many functions like the ones stated by Siddiqi (1986). He has given a long list of functions, which are to be performed by the present day Islamic states. He has classified them into the following three-broad categories: 1. Functions permanently assigned by Shariah. 2. Functions derived on the basis of ljtihadi for the present situation. 3. FUllctions assigned to the state by the people through the process of Shura (i.e. consultation). Performance of these functions is only possible if enough resources are available to the present day Islamic states. Under the circumstances the present writer is of the view that for satisfying the revenue needs of the present day Islamic states, there is no way out except to resort to new taxes in addition to the traditional taxes. Some Muslim jurists of the medieval period of Islamic history especially AIGhazali (1937) and AI-Shatibi (1914) have, permitted that additional taxation can be resorted to if the needs, particularly the defence needs, of the state require so. Some Fuqaha [AI-Qardawi (1980)J have also laid down certain conditions for levying of additional taxes. These conditions are briefly stated below:

Muhammad Hussain

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