Essay On Public Finance In Islam

Public finance in Islam

Summary

As a matter of fact, it is quite obvious that such a large empire which existed for several year centuries and dealt with a large population with a huge budget must have established a consistent and operational system for fiscal administration. From the historical records of the early Islamic history, we find that fiscal planners and policy makers of the period dealt with a host of fiscal issues that we classify today under the scope of public finance such as revenue collection, rate and structure of taxation system, the distribution of tax burden in accordance with the Islamic values of equity and justice, disbursement of revenue for the welfare of the people and development of economy and so on. The Muslim contribution to the evolution of public finance remained almost neglected by the historians of the subject till now. Interestingly these ideas came in an era when Europe was sinking into what historians commonly called “the Dark Ages of Europe”.

Since interest is prohibited in Islam, the government in an Islamic economy cannot issue interest based

It was not merely a fiscal operation at the discretion of the ruler. Rather it was based on the guidance from Islamic shari’ah and aimed at public interest. The general principles of public finance in Islam are derived from the verses of the Holy Qur’an. It should be noted that the Holy Qur’an does not provide details of fiscal policies but there are some economic teaching and guiding principles which determine such policies. The necessary details and guiding principles were classified by the Prophet Muhammad (SAW) for practical and functional purposes of public finance. Thus the Sunnah (i.e. the saying, the practices, and approvals) of the Prophet (SAW) became the second important source of public finance in Islam after the Holy