Pakistanization of Indonesian zakat?

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.”

He said research conducted by the Public Interest Research and Advocacy Center in 2007 found the number of people highly interested in helping others was extremely high, but many raised doubt over the transparency of institutions managing their donations.

“We have proved we manage funds transparently. We always publish our audit for the public. Every single donator is informed on where their alms go,” Juperta said.

A bill on the revision of the 1999 Zakat Management Law is waiting for deliberation at the House of Representatives. One main point in the draft, which causes concern among privately run alms management institutions, is the plan to centralize alms collection and management.

The Religious Affairs Ministry said the bill was proposed due ineffective alms management in the last 10 years. It also proposed the new law would only recognize state-run alms management agency Badan Amil Zakat (BAZ) as the only institution to manage the funds, from the national down to the subdistrict level.

Then religious affairs minister Maftuh Basyuni said in a meeting with the Regional Representatives Council Ad Hoc Committee late February last year that currently there was no clear relation between various zakat institutions. Some are under the coordination of BAZ, while others operate independently, he added.

He said the unclear relation makes it hard to map the alms’ potentials and targets across the country, resulting in unequal distribution.

Separately, Ismail A. Said, president director of noted privately run alms institution Dompet Duafa, suggested the government consider the Indonesian Central Bank operation manner. “The Indonesian banking system allows private- and state-run banks walk side by side, growing and competing healthily. The Central Bank clearly positions itself as a regulator and controller. It doesn’t play as an operator. Business roles are fully performed by both private and state-run banks,” Ismail said. “We demand the government act fairly. Private alms institutions also build awareness among the community to pay for their zakat obligation.”

Bambang Eka Wijaya, a member of the Lampung Care board of founders, urged the government to eradicate the point to centralize alms collection and management in the draft bill. “I’m afraid that if the bill is approved and gives the government the authority to solely manage alms, we might have more low-income people in the country because it’s likely that less people will pay alms since they may not trust the government body.”

Granted, there would be advantages of a centralized system that could oversee and audit Indonesia’s zakat contributions, but tax accumulation and centralization, which are worrisome under an Islamic financial model, should not be viewed a “charity reform” measure.  A national Indonesia zakat would probably also encourage Muslims there to start imposing the jizya against non-Muslims (just as has happened in Pakistan) out of “fairness.”