The Curious Silence Of The Islamists On The National Budget

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The record 2024-2025 National Budget presented last week (October 18, 2024) elicited many responses from various groups, except for one. The Islamists were conspicuous by their collective silence. 
M. Bakri Musa
Perhaps they were content with the generous funding they received, from the already massive RM1.9 billion for the outgoing year to the proposed RM2.2 billion for the next. That figure grossly understates the true level of expenditure as it excludes the religious bureaucracies in the various ministries. Consider that each embassy has its own resident Imam. Then there are the Islamic schools under the Ministry of Education.
With Islamic scholars fixated on their Islamization-of-everything fad, their silence on the national budget is not only conspicuous but also unfathomable. One expects them to have substantive views on this most critical aspect of governance.
The Qur’an mentions zakat, tax on wealth with a flat rate of 2.5 percent. Modern income tax is based on income and is progressive, with increasing marginal rates. Zakat is levied only on liquid and movable assets. Homes are thus exempt. That is not equitable; consider the difference between a sultan’s magnificent palace and a teacher’s modest bungalow. Zakat’s flat rate also means that a billionaire sheik pays the same rate as a school teacher. Again, little equity there, and equity is the core of Islam. From that angle, income tax is more “Islamic.”
Islam cannot claim originality with zakat. The ancient Greeks had their eisphora, asset tax levied on the super-rich. Two millennia later, French economist Thomas Piketty suggested a progressive global wealth surtax of up to 2.5 percent (zakat rate) to combat global inequality and climate change. In 2020 “Millionaires For Humanity” advocated a similar wealth tax to combat poverty, Covid-19, climate change, and meeting the UN Sustainable Goals.
Imposing a wealth tax on all assets both local and abroad would generate far more revenue than tinkering with the current tax code. It would also be far easier to assess and administer. Its low rate (as with zakat 2.5 percent) discourages cheating.
The Quran also defines how zakat funds should be spent. With creative interpretations, all activities of a modern government including military spending could be placed under any one of the eight Qur’anic categories.
The first two, spending on the poor and needy, are self-evident. Less appreciated is the building of infrastructures like roads and marketplaces. With roads, poor rural dwellers could bring their produce to sell in town as well as bring their sick to hospital.
The first thing the Prophet, s.a.w., did when establishing his first Muslim community in Medinah was to build a marketplace so people could trade with one another. A trader before receiving his prophethood, Mohammad, s.a.w., knew the value of trading in enhancing social bonds. A businessman has to treat others not as “them” rather as potential clients, customers, and business partners. That brings a whole new and productive perspective on your relationships.
Another zakat provision is freeing those in bondage. That may seem quaint or irrelevant in today’s world sans slavery and indentured servitude. However, stretching the concept, the greatest bondage faced by the ummah today is ignorance and poverty, no less crippling than physical bondage. Alleviate poverty and ignorance, and you liberate your people.
Zakat mandates not more than 1/8 (12.5 percent) of the collections be spent on administration. Translating that to modern governance, that should be the limit for civil service emoluments. In the 2024-25 Budget, emoluments constituted 24.3 percent of the total, double zakat’s limit. The good news is that it is a substantial decrease from last year’s 31.5 percent.
Failure to control emoluments would result in what my Minangkabau wisdom calls “Habih dek orang pangkar!” Translated, the host’s servants gobbling up all the food leaving little for the guests.
Zakat’s “spending in the cause of Allah” should cover anything that would benefit the ummah, from building schools to cleaning streets as well as unclogging drains and dredging rivers to avoid floodings.
Ancient Muslims recognized that wealth, like water, is best kept circulating. Zakat achieves this. The concept of “velocity of money,” a measure of an economy’s vigor, also reflects this wisdom.
Islam considers interests, and by extension debts, haram. Debt however, is a powerful leveraging mechanism. It enabled me to provide a house early in my career for my young family; for others, to secure their higher education. Both are good, and thus halal. As for the size of the national debt, Japan has the highest debt-to-GDP ratio and yet her people are prosperous. Problems arise when debts are foreign-denominated and the proceeds are used to build grandiose projects rather than productive infrastructures or investing in citizens.
Islamists should push for taxing all assets and incomes. Exempting foreign ones, the current practice, only encourages Malaysians to park (meaning, hide) their wealth abroad. Not only does that not benefit the nation, it also encourages corruption. As the Pandora Papers revealed, even the Minister of Finance has significant assets abroad. Such hypocrisy!
Zakat is treated as tax credit in Malaysia instead of only being tax deductible as in America. However, zakat benefits only Muslims while non-Muslims pay the bulk of the income tax that benefits all Malaysians. Is that just? Further, as per the New Economic Policy, most government programs benefit Malays.
This issue of equity and justice should concern all Malaysians, more so Muslims. Equity and justice are Islam’s core.
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