Economic thought in the Christian West and that of Islam

b) Ghanimah or spoils of war
This refers to movable possessions taken in the battle from the enemy, the distribution of which has to be in accordance with Ayat 41 of Sura Anfal (8) of the Holy Quran. "The rule is that a fifth share is set apart for the Imam (the Commander) and the rest is divided among the forces. The fifth share reserved is expressed to be for Allah and the Apostle, and for charitable purposes for those to whom charity is due. Ultimately everything is at the disposal of Allah and His Apostle; but four-fifths are divided, and only one-fifth is retained for the special purposes. The Imam has discretion as to the mode of division. In the Apostle's life-time a certain portion was assigned to the Apostle and his near relatives".

In the early days of Islam, land was also considered Ghanimah and it used to be divided among those who had fought, but Hazrat Omar, the second Caliph excluded it from Ghanimah and left in the hands of its previous owners who were to pay tax to the state. Therefore, Ghanimah was a significant source of income during the period of numerous and frequent holy wars.

(c) Fai

Fai refers to booty surrendered by non-believers at war but without fighting. This Fai as a revenue of the Islamic state and its heads of expenditure were prescribed in the Holy Quran in the fourth year of Hijrah. The distribution of fee has been distinctly described in Ayat 6 and 7 of Sura Hashr (59).

Allah giveth as spoil unto His Messenger from them where the believers made no expedition with either cavalry or camelry. In fact the enemy surrendered at the first onset. Therefore Allah gave His Messenger lordship over whom He wills because Allah is able to do all things.

These spoils which were given by Allah to His Messenger from the people of the township, i.e. from the enemies. It is for Allah and His Messenger i.e. the state and for the next of the near kin and the orphans, the needy and the wayfarer. In other words Fai does not become a commodity between the wealthy and riches.

History will tell us that fee was managed by the Holy Prophet (peace be upon him) as state property and the proceeds of it were used for the general good of the poor, needy and orphans.

(d) Kharaj

Kharaj means land tax which are of two kinds: proportional and fixed. The former is imposed as a share of the total agricultural produce of the land, e.g. one-fourth, one-fifth etc. the latter is a fixed tax on the land. The proportional Kharaj is variable with output and charged on each crop, the fixed kharaj is collected once a year.

Under Islamic law, Kharaj must be imposed of all lands conquered by force and not to be divided among the army but left to the original owners or allocated to non-Muslim settlers.

We find that Kharaj was first introduced after the battle of Khaibar, when the Holy Prophet (peace be upon him) allowed Jews of Khaiber to return to their lands on condition that they paid half of the produce as Kharaj. In all ages, Kharaj constituted a major source of revenue for the Islamic state; it belonged to the community as a whole and not to a particular group.

(e) Jizyah or poll tax

Since Christian and Jews were exempted from military service under the Islamic state, they were given the concession that the Islamic state would guarantee the security of their persons and property in exchange of payment of Jizyah. Jizyah was later extended to other non-Muslims.

Based on a direct injunction of the Holy Quran, as was enshrined in Ayat 29 of Sura Tauba (9). For the better understanding of my readers, I would like to mention the whole Ayat, which runs thus:

Fight those who believe not

In Allah nor the Last Day,

Nor hold that forbidden

Which hath been forbidden

By Allah and His Apostle,

Nor acknowledge the Religion

Of Truth, (even if they are)

Of the People of the Book,

Until they pay the Jizya

With willing submission,

And feel themselves subdued.

Jizyah was criticized by many non-Muslim historians as an arbitrary tax imposed on Non-Muslims. Abdullah Yusuf Ali in his Text, Translation and Commentary of the Holy Quran explains Jizyah thus:

"Jizyah: the root meaning is compensation. The derived meaning, which became the technical meaning, was a poll-tax levied on those who did not accept Islam, but were willing to live under the protection of Islam, and were thus tacitly willing to submit to its ideals being enforced in the Muslim State, saving only their personal liberty of conscience as regarded themselves. There was no amount fixed for it, and in any case it was merely symbolical, -- an acknowledgement that those whose religion was tolerated would in their turn not interfere with the preaching and progress of Islam. Imam Shafi suggests one dinar per year, which would be the Arabian gold dinar in the Muslim States, equivalent in value to about half a sovereign, or about 5 to 6% rupees. The tax varied in amount, and there were exemptions for the poor, for females and children (according to Abu Hanifa), for slaves, and for monks and hermits. Being a tax on able-bodied males of military age, it was in a sense a commutation for military service.

2) Expansion in the sources of income

The expansion in the sources of income took place from the time of second Caliph Hazrat Omar (R.A.). His first action was to exclude conquered lands from the ambit of Ghanimah (spoils of war) and treated them as Fai (Booty): but he left them in the hands of their original owners by imposing land tax on them. In this way he maintained them as a permanent source of revenue for the needs of the state and for posterity.

Hazrat Omar (R.A.) allowed Governors to collect custom duty from the foreign merchants crossing into the Islamic state from enemy lands. In the same way when the Muslims crossed the border of the enemy countries, and if the charge was not known, then the custom duties were payable by the foreigners at the rate of one-tenth of the total value of the goods.

Customs duties or tolls were later extended to Dhimmi (protected non-Muslim) and Muslim merchants of Islamic state who wanted to use the highways. The rate charged from Dhimmis was five per cent, while it was two and one-half per cent from Muslim traders.

3. Financial administration

During the days of the Holy Prophet's (peace be upon him) financial administration, revenue was collected by officials sent for that purpose. In remote cities the task was assigned to the Governors of that area. The Holy Prophet (peace be upon him) used to advice the Governors to collect Zakat from the riches and distribute it among the poor of that area. As and when collectors were returned, their accounts were checked. Any gifts made to collectors were considered public income and are not personal income. In this way there was no possibilities of corruption. Collectors were paid salaries as compensation for their labour.