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The Zakat: Part II

November 7, 2009

Leaving aside the profound flaws of the zakat for the moment, this second post in Money Jihad’s zakat series will address the legal and administrative details of zakat collections.

Who pays & when:  Muslim men and women pay the zakat.  Paupers who are eligible to receive the zakat do not pay the zakat.  However, there are numerous statements in the Hadith to the effect that giving just one date fruit is better than giving nothing.  Payment is due annually at Ramadan.

How much:  The Sahih Bukhari says “For silver the Zakat is one-fortieth of the lot (ie 2.5%)” (2.24.534).  In this passage “silver” has been interpreted throughout Islamic history as liquid monetary wealth, whether it’s in cash, gold, or silver.  The zakat tax rate of 2½ percent should be carefully distinguished from the Christian tithe of 10 percent, or American marginal income tax rates of 10 to 35 percent.  The zakat taxes wealth, not income; that is, it counts against everything a Muslim possesses at the end of their lunar year after paying any debts or expenses.  It is not a tax on profits or net revenues (which are subject to different tax rates, especially among Shiite Muslims).

Just to give you a sense of what the zakat tax rate means, multiply your net worth by 2½ percent.  Compare the result to what you paid in income taxes last year.  If your personal finances are like mine, the two figures are comparable.

Deductions:  With the zakat (somewhat similarly to taxes on personal property such as commercial inventory or privately owned boats in the United States), there is an established threshold value under which no goods are taxed.  In Arabic, this threshold value is known as the “nisab.”  For example, Sahih Bukhari 2.24.534 establishes that no zakat is due on less than 200 silver dirhams (which today would be several hundred U.S. dollars).

Animal wealth:

  • Animal nisab:  Apart from the 200 dirham nisab on monetary wealth, the Hadith outline nisab for animal wealth.  A Muslim pays no zakat on less than five camels or less than 40 sheep.  For animal wealth in general, the zakat is paid with a smaller number out of your animals or an animal of lesser value.  For example, if a Muslim owns between five and 24 camels, he pays the zakat with one sheep.  The larger your herds, the higher animal zakat you’ll pay. 
  • Camel taxesI’m trying to convey the animal tax as simply as possible, but the Hadith’s arcane rules on camel wealth are beyond my powers to condense.  Strikingly, Islam’s tax on money is explained in just one sentence, while the tax on camel wealth goes on for paragraphs after paragraphs.  I suppose this is what happens when a tax system that is supposed to endure for eternity is established in 8th Century Arabia.
  • Horse exemption:  The zakat is not due on horses (Shahih Muslim 2.24.542).  I cannot find a Koranic explanation for the exemption, but I have read elsewhere that it was granted because horses help carry holy warriors in jihad.

Other forms of zakat

  • Zakat on treasure trovesThe zakat is the subject of Book 24 of the Sahih Bukhari.  Its general discussion of the zakat includes this statement:  “Khumus is compulsory on Rikaz” (2.24.575).  “Khumus” or khums means one-fifth.  Not surprisingly, modern Muslims have determined that the “rikaz,” which referred to discovered wealth like buried treasure chests, also applies to oil fields.
  • Extra or voluntary zakatIn the Koran and Hadith, the terms zakat and sadaqa are at times used interchangeably.  However, most people have settled on using the term zakat to apply to the obligatory zakat levy, whereas sadaqa is used to describe voluntary giving.  I follow that approach as well.  Sadaqa is less repugnant than the zakat in that it is made not compulsory by religion, but in modern application it is still troubling:  many of the donations funding Islamic charities are given by wealthy Muslims who are giving sadaqa beyond their zakat.
  • The ushrThe 5 to 10 percent harvest tax may also be considered a form of zakat.  Since the ushr is a major revenue source of Islam, it will merit a separate essay on Money Jihad in the future.

Penalties for non-payment of the zakat

What is the consequence for a Muslim who does not pay the zakat?  His wealth will be made like a venomous snake.  “The snake will encircle his neck and bite his cheeks and say ‘I am your wealth, I am your treasure’” (Sahih Bukhari, 2.24.486).

The message from Muhammad to would-be deadbeats is indeed grim.  Apart from the snake metaphor, the Hadith threaten to cauterize non-payers’ foreheads and backs with scalding plates in hell for 50,000 years.  Yikes!  And those who don’t pay the zakat on animal wealth will be trampled and gored by those animals on Resurrection Day.

And you thought ye olde English debtors prisons sounded bad!

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