Allowing 100% tax deductions for zakat

Javed Ahmad

Bangladesh has never been an Islamic state despite the fact that the majority of the inhabitants in the country are Muslims. The country was founded as a secular state upon separation from Pakistan (which is also a Muslim majority secular state) with a constitution and political party based democratic system. Therefore, the current hue and cry of re-writing the constitution in order to make Bangladesh a ‘pure secular state’ is a joke.

Ideally, Bangladesh should be an Islamic state; but it is not. I do not know how our people in the government and the uneducated and inattentive inhabitants would defend their ‘secular’ stand on the Day of Judgment totally ignoring and denouncing Islam as a ‘way of life’ prescribed by Allah Himself in the Qur’an and Sunnah.

Regardless, the practicing Muslims of Bangladesh always looked for ways to comply with Islamic principles at individual levels or in small groups. Payment of zakat is one such factor.

The government of Bangladesh does have some zakat related activities but those programs did not find a popular ground or acceptance. People still prefers to distribute their zakat at a personal level and within their known circles ensuring that the distribution is properly used. For instance, this year I have bought a used rickshaw for a rickshaw puller who is known to us for sometime. As a result he now owns a rickshaw and can work in flexible time table not having to pay any rent to anyone anymore. On the other hand, my wife have given part of her zakat money to our maid at home who used the money to lease some farm land in her village under the management of her brother who is now cultivating them that is bringing them solvency in their families. Our maid is an old woman who is single and got no children; therefore, we hope that she would be able to retire at her own village home spending rest of her life worry free with her remaining family members. My remaining zakat amount went in buying uniforms for all the orphans in our neighborhood orphanage that made them all happy.

I did all that in addition to paying my income taxes to the government. A large sum of my income goes to income taxes on which I have no control or say. The government takes the liberty to spend them as they like with or without any accountability. I have no problem with that as long as the tax amount goes to the development of the nation and its people while returning some favors to the citizens in from of some meaningful services – like welfare, healthcare, insurances, education, etc.

Fortunately for the zakat payers, Bangladesh still has plenty of needy people who would love to accept zakats. In many countries paying zakat is a difficult matter. A time will come when it will be difficult to find anyone who would be willing to accept zakat as explained in the following hadith -

Narrated Abu Huraira: The Prophet said, "The Hour (Day of Judgment) will not be established till your wealth increases so much so that one will be worried, for no one will accept his Zakat and the person to whom he will give it will reply, 'I am not in need of it.' " (Bukhari 2.493).

Many of my family members living abroad send their part of zakat to Bangladesh for distribution here through our known channels and networks. Therefore, we should give as much as we can while the opportunity lasts.

Our government does allow provision to deduct zakat and donations partially (i.e., 10% of the total amount spent). But I think in order to encourage people and in distributing their 2% of total wealth as zakat annually to the poor and to reduce the burden of individual tax (i.e., income tax plus zakat), the government should allow 100% tax deductions provided the distribution is acknowledged and verified by the National Board of Revenue (NBR) in cooperation with the National Zakat Board (if it still exist and operational) confirming the amount spent; so that the tax payer could add that document with their tax returns claiming credit or deductions.

Since the amount of zakat is spent inside the country in charitable welfare of its people in an attempt to alleviate poverty in line with governmental goal, this amount could easily be credited to the tax payer. This way, through the verification process, the government would know using a statistical method what benefit the new arrangement is bringing to the nation from peoples participation in poverty alleviation through the disbursement of zakat.

Mr. M. Kabir Hassan, Dr. Mahamood Ahmed, Mr. Juanyed Kahn, et al – all renowned economists and researchers of Bangladesh have done some remarkable research work and presented their papers at national and international levels proving the benefits of zakat system as a solution to national economic problems and as a way to alleviate poverty in Bangladesh. Two such references are listed below under references at the end of the article.

To most of us, who tries hard to strive in the way of Islam to live an Islamic life advocating peace and harmony locally and internationally would like to see the government accommodate as many Islamic principles possible in the secular environment so that we could perform our religious duties easily and smoothly as the following hadith says -

Narrated Abu Huraira: The Prophet said, "Religion is very easy and whoever overburdens himself in his religion will not be able to continue in that way. So you should not be extremists, but try to be near to perfection and receive the good tidings that you will be rewarded; and gain strength by worshipping in the mornings, the nights." (See Fath−ul−Bari, Page 102, Vol. 1). (Bukhari 1.38).

After all, in the end, there is no denying that we all would be laid to rest three feet underground upon our death. Those of us who expects our good deeds to be recognized after death may see some light and rewards. If not it will all be dark and nothingness sharing the same consequences of the disbelievers. When Ali (R) was asked for proof of life after death, he replied, “Say there is no life after death then none of us would have to worry. The only thing is, all my good deeds will go in vain and will not be rewarded. But what if there is a life after death and God is waiting to judge us? In that case, I will win and you will lose.”

References:

"Substitutability of Zakat Funds in the Budget of the Government of Bangladesh." M. Kabir Hassan, UNO, and Mahmood Ahmed, Islamic Bank Training and Research Academy (IBTRA), Dhaka, Bangladesh.

“Zakat, external debt and poverty reduction strategy in Bangladesh.” M. Kabir Hassan, Department of Economics and Finance, College of Business Administration, University of New Orleans (UNO), USA; and Juanyed Masrur Khan. 2007.