Pakistan has a fully Islamized tax system including government mandated zakat collections against Sunni Muslims. This nationalized zakat has led to widespread corruption, uneven collection rates, and funds channeled to terrorism (intentionally in accordance with the Koran or unintentionally in other cases).
Even more ominously, the Pakistani tax system also revived the Islamic interest in traditional revenue collection methods laid out the Koran and Hadith. The Taliban learned these lessons well from their Pakistani teachers and reintroduced them in Afghanistan where they’ve collected zakat, sadaqa, ushr, jizya, and fida’ (ransom) both when they were ruling Afghanistan up to the present.
The diverse revenue base inspired by Islam and the Pakistani tax system has enabled massive wealth accumulation by the Taliban. The Taliban continues to be a difficult foe for NATO because of its financial resources.
Now Indonesia is considering the adoption of Pakistan’s awful model. Although I disagree with their reasoning entirely, I find myself in rare alignment with the local Indonesian zakat activists who are opposed to the national plan… From the Jakarta Post on May 25:
Activists rejected a government’s plan to centralize the collection and management of alms or zakat, arguing the move would end privately run alms institutions and disadvantage low-income people as recipients.
Juperta Panji Utama, secretary-general of the Zakat Movement for Indonesia, an alliance of alms institutions from across the country, said privately run alms institutions have so far been working effectively in collecting and managing alms from the community.
“The government cannot turn a blind eye to the fact that more people trust privately run zakat institutions, not state-run ones, to distribute and manage their alms,” Juperta said.
In terms of collection, he said privately run zakat management institutions or LAZ could collect higher fund amounts, while in terms of distribution creativity, many could provide facilities for the poor, from free hospital care and schooling to economic empowerment programs.
“We have been helping the government in dealing with poverty. Please don’t end private zakat institutions just because there’s an opportunity to collect huge amounts of money from the community.”