The Muslim wealth tax Zakat is the best blueprint for making Western societies fairer ǀ View

By Adeem Younis

This week sees 1.8 billion Muslims celebrate the “Festival of Sacrifice,” or Eid Al-Adha. But the idea of sacrificing one’s hard earned money is a year-round activity for Muslims, who are the world’s most giving faith community when it comes to charity and philanthropy. This is especially true of Muslim communities in the UK and North America.

Muslim charity is built on the concept of Zakat, a 2.5% standing wealth tax that is eerily similar to the wealth taxes being proposed by various US billionaires and 2020 Presidential hopefuls. Could Islamic philanthropy provide a blueprint to reform predatory capitalism and fix our painfully unequal societies?


A wealth tax like Zakat may seem unorthodox to the point of being unworkable, but it is already implemented in many Muslim-majority countries whose economies are not completely dissimilar to those in Europe and North America.
Muslims in the UK, for example, give £371 per person to charity per year on average – more than the Jewish community and more than double the average Christian. Although this peaks around key festivals and occasions like Eid and Ramadan, it is an ongoing trend that is hardwired into many Muslims’ practice of the religion.

This has even led some to refer to members of the Muslim faith as the “fourth emergency service,” due to the incredible range of activity of Muslim-led charities like Penny Appeal in response to natural disasters at home and abroad.

This charity has always been for both Muslims and non-Muslims: although some categories of Islamic charity are primarily for members of the Muslim community, others are specifically for wider society, regardless of the recipient’s background.

Although charity has been at the heart of Islam since the faith’s beginnings, it is only recently that many have woken up to the potential for this giving to create social change, especially since Muslim communities in the UK, Europe and North America have become increasingly wealthy and more socially aware. Whereas many first generation immigrants were simply in survival mode, their children and grandchildren are often professionals or accomplished business people with increasing disposable income that they choose to use for social good.

This is against a backdrop of rising inequality around the world and here at home in the UK. The use of food banks is at an all-time high, welfare systems are struggling and society is becoming more and more divided. These conditions are unacceptable anywhere, but especially so in one of the world’s richest countries.

Perhaps the solution to this can be found in the tradition of Muslim charitable giving. As I have already mentioned, the Zakat wealth tax is a simple 2.5% payment on assets held for a year above a (relatively low) threshold.

‘Zakat’ comes from the Arabic word meaning “to purify,” and it is this kind of charity that has the power to purify wealth from the painful and unjust inequality that it often creates.

A wealth tax like Zakat may seem unorthodox to the point of being unworkable, but it is already implemented in many Muslim-majority countries whose economies are not completely dissimilar to those in Europe and North America.
And support for a Zakat-like wealth tax that can match the scale of Muslim charitable giving in the broader society is building in the US. It’s understandable that a new wave of leadership is looking to make drastic changes. Decades of policies against inequality by both left and right wing parties have essentially failed.

Centre-right parties instinctively believe that more pro-business incentives (i.e. lower taxes) will make society more equal, since those growing businesses generate tax revenue. However, the largest businesses, as well as high net worth individuals, often pay little or no tax through a combination of low tax jurisdictions, transfer pricing, and even trusts – all of which are usually legal and almost impossible to stop through legislation.

This makes left wing parties’ solution of higher taxes not only ineffective but counterproductive: to generate more tax receipts when the richest are paying so little, they are forced to tax the poorest more and more. This vicious cycle has increased inequality for many years, and something needs to change, particularly when endemic inequality has created the conditions for economic fissures to spread into social and ideological divides which accommodate the rise of the Far Right.

Many business leaders and centre-left politicians have called for a wealth tax that is Zakat in spirit if not in substance. In June this year, 18 of the wealthiest Americans wrote to presidential hopefuls urging them to adopt this kind of policy. It seems Elizabeth Warren has heeded their call, incorporating a wealth tax into her Democratic nomination campaign.
Interestingly, income tax is considered an oppression in classical Islamic law. If the only tax we had to pay was 2.5% of whatever we own for a year, most, apart from the ultra-rich would find they’d pay a lot less tax.

It is unclear whether these policies will ever see the light of day. Until then, our societies will have to rely on charitable giving – led by Muslims, but supported by us all.

Adeem Younis is chairman of Penny Appeal, a British-based Muslim charity working in 30 countries around the world, including the UK


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