Mar 08,2014
Published in Islam as a Solution

Islam on Poverty

There are 400 billionaires in the US today. They own the equivalent wealth to half of the world’s population, and the poorest three billion people in the world live on less than $2 per day. This is not to suggest that there should not be billionaires, or that they accumulated this wealth through dubious means (although some have). However, in the context of world poverty, we need to consider this vast gap.


Look at the figures for children:

  • Number of children in the world: 2.2 billion
  • Number in poverty: 1 billion (i.e. 1 in 2)
  • No adequate shelter: 640 million (1in 3)
  • No access to safe water: 400 million (1 in 5)
  • No access to health care: 270 million (1 in 7)
  • No access to education: 121 million
  • [Source: Unicef]

 

Have we not tried?

The United Nations Millennium Development Goals set eight international development targets including those for eradicating poverty and reducing child mortality. Sadly, there has been little progress. The lead countries failed to meet donor targets and projects have failed to meet expectations.  People are disillusioned when charitable projects, including high profile events like Red Nose day, Band Aid or Live Aid, have had little long-term effect over decades.


Is there an alternative?

Most people have been led to believe that there are only two workable options; the Capitalist promise to successfully provide a ‘trickle down’ approach to the poorest in society, and a leftist dream of imposing equal income distribution that does not eradicate market ambition and enables riches for all. Unfortunately, neither of these approaches has worked thus far.

Islam offers an alternative solution; one that sees poverty as a crucial issue to address and not just a nicety. This approach was successful for hundreds of years under the Islamic State.

Islam’s solution to poverty is a personal tax upon all who have unutilised wealth over the course of the year. The 'zakat' is 2.5% of this wealth, which is also levied upon business and trading inventories together with farming livestock. Primary recipients of zakat are the poor and destitute. It must be collected and it must be distributed, and the government cannot use zakat funds for any purpose other than the core-defined zakat spending groups. If for any reason the zakat collection is not sufficient for the poor, additional wealth based taxes are levied upon the population to meet the requirements.

So a billionaire with $1,000,000,000 of eligible assets will pay zakat of $25 million per annum, hardly a burden. Whereas a person with a more modest unutilised wealth of $10,000 over the full year, will pay only $250. It is proportionate and fair on all.

The UN has calculated that the whole world population’s need for food, drinking water, education and health care could be covered by a levy of just 4% on the accumulated wealth of 225 of the world’s largest fortunes!


Wealth taxes do not kill ambition

Another effect of wealth oriented taxes like zakat, is that it naturally directs one towards spending and wealth circulation (fully utilised wealth is not subject to zakat). By contrast, the system of interest, dominated by the capitalist banking system, constantly takes money out of circulation in times of recession. Interest is a tax, not given to the poor but to bankers. Banks hoarding the money in difficult economic conditions is the exact opposite of what the economy and poor require. Money and constant credit creation is problematic as it devalues money, which leads to increased instability and insecurity.

The Prophet Muhammad (peace be upon him) explained poverty eradication as a fundamental right for all people:


"The son of Adam has no better right than that he would have a house wherein he may live and a piece of cloth whereby he may hide his nakedness and a piece of bread and some water" [Al-Tirmidhi].

 

To download the PDF Tri-fold brochure of this article, click HERE.

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