Poverty, Taxes, Zakat & Charity [Archives:1999/32/Business & Economy]

August 9 1999

Dr. Azza Mohammed Abdo Ghanem 
Professor of Psychology 
Sanaa University 
It has become more than clear recently, that there are a lot more beggars than a few years ago. Admittedly the world is suffering from recession, inflation, unemployment, and a wider schism between the rich and the poor. Fortunately we are not responsible for global predicament. All we need is to prevent our own situation from getting worse and to find possible logistics to improve things in the long run. So easily said, but difficult to implement. 
In a recent study of the family budget sponsored by the World Bank and carried out in Yemen, it was established that 11.8% of urban families live below the poverty line for “food” /estimated at 2121 riyals per person per month) and 23.7% of urban families live below the higher poverty line that includes food, clothing, education and health care. The situation is even worse for rural families with 17.3% below the poverty line for food and 31.2% the higher poverty line. Some governorates had much higher concentrations of the very poor. The uneducated were a lot worse off than the educated. Inflation has risen from 30% in 1992 to 56% in 1995, Unemployment was estimated in the last population census at 12.2% of the work force. Child labor has risen from 4% to 6.5% in the period 1991-94 because children provide cheap labor and their needy families encourage them to work. 
Needless to say several factors joined forces and culminated in the present state. Amongst these were the 1990 Gulf War, the return of a million Yemeni emigrants, the discontinuance of foreign currency remittances from Yemeni labor abroad, the cessation of Gulf states aid, the expenses incurred by the Yemeni unification in the 1990s, the aftermath of the short civil war waged by the separatists in 1994, the high inflation, the wastage of around 6 million dollars a day an Qat and smoking, and the geometric progression of one of the highest population growth rates in the world of 3.7% which will result in the doubling of the Yemen population every 19 years. It is quite an alarming thought, that not only do we not have extant sufficient facilities e.g. schools, training centers, hospitals etc. for those who exist but we also need to double the services that do not exist. 
Obviously the taxes levied have not been able to solve the problems of poverty. For one thing only definitive government salaries are taxed, the rest remain at large or go to private collectors. I think it is wonderful that we don’t have to fill tax forms (except business people). It is such a worrying and nerve racking ordeal for citizens in many developed countries. But on the other hand they do receive services in return and substantial ones for that matter so if the tax forms drive one nuts, he/she has a good psychiatric ward to take care of him/her. 
So what is the alternative to taxes? Charity, giving alms on sporadic occasions, releasing left over, handing riyals at traffic junctions etc. It does not solve the problem of over 20% of the population who live in poverty. How about non-governmental organizations which appeared a few years ago with the illusion that they are the panacea that the government has failed to concoct. NGOs have to be assessed and evaluated for much of their achievements is to say the least rather limited and temperamental. They are old fashioned now, and the developed countries had better come up with a new gimmick with much more practical logistics. 
A possible solution for poverty would be proper implementation of Zakat. A foreign friend asked me to explain the difference between Zakat and Sadaqa. The latter is a gift of money or something to a person or institution with no restrictions or rules such as how much, who gets, when etc. Zakat is the poor-due a charity subject to rules and regulations. Zakat is one of the five pillars of Islam, namely the admission and belief in the oneness of Allah, and that Mohammed is his messenger, the fulfillment of daily prayers, the giving of Zakat, the Hajj to Mecca once in a lifetime and fasting in Ramadan each year. 
Zakat is mentioned 80 times in the Quran and mostly in conjunction with prayers as can be seen in the next verses of the Quran: 
“And the believers, men and women, are supporting one another, they enjoin the right and forbid the wrong, and worship in prayers, pay the poor-due (Zakat) and obey Allah and his messenger.” Surah Al-Tawbah – Repentance 71. 
“Establish worship and pay the poor-due and whatever good you send in advance is for your souls and you will find it with Allah”. Surah Al-Baqarah – The Cow 110. 
Zakat is a duty, mandatory and quantified. 
It is essential for the life of Muslims as a community. 
1-It is proof of belief in Allah and the rules of Islam. 
2-It is a form of cleansing for the soul, the deeds and behavior. 
3-It brings pleasure into the heart of those who give and receive 
4-It is a form of relief for those in need. 
5-It is a cure for the imbalances and inequalities in society. 
6-It is a rich source for the reduction of poverty. 
7-It is a way of alleviating ill feelings of the poor towards the rich and creating cooperation and security. 
8-It is a clearly stated that wealth is not reduced by giving Zakat but rather enhanced. 
Zakat is a tax at a fixed rate in proportion to the value of ownership. It is calculated individually at 2.5% of the value on completion of a year of possession. It is between the person and God, his/her conscience must be clear for one cannot cheat God. 
What is eligible? It is calculated on many items: gold, silver, cash, coins, jewelry, stocks of goods, property used for trading in but not property for personal dwelling or shop, shares, crops or harvest, and reared animals for trade. There is however a lower limit beyond which Zakat becomes imperative. 
Thus for example alnisab – the lower limit – for gold ownership is 85 grams, for silver it is 595 grams. As for female jewelry, a female is exempt from a certain amount that she can wear at any one time reasonably. 
How is it dispersed? It is mostly done individually to acquaintances who are known to be in need. In the old days it was given to the treasury to be distributed -bait almal – But today not much trust is placed in official channels method of distribution. Who is eligible to receive? These, are the poor, the needy, those who are involved in collection and distribution of Zakat, converts into Islam who are in need, those who are in debt or must pay compensation, soldiers fighting for the sake of God, and travelers or strangers who cannot support themselves. Zakat can be sent to the poor Muslims in other countries if they are in greater need there. 
This is a very brief summary of the concept of Zakat. If this is implemented by all Muslims honestly and correctly, there will be much less poverty in all Islamic countries. Zakat is a regular, specific, sizeable charity and not an optional, sporadic, meager charity. It is usually calculated and released around Ramadhan of each year when a lot of funds circulate.