Indirect Taxes are contrary to Islamic teachings: Maulana Sherani

[third eye]

http://www.dawn.com/news/1254769/in...ary-to-islamic-teachings-says-maulana-sherani

ISLAMABAD: Council of Islamic Ideology Chairman Maulana Mohammad Khan Sherani said that indirect taxes are contradictory to the teachings of Islam and prohibited in Sharia.

“Taxes can be imposed only on income,” Sherani said while addressing a press conference at the end of a two-day seminar on Islamic system of economy.

The CII chairman maintained that tax cannot be collected from the end consumers on the purchase of a product instead it should be collected from the industrialist and traders.

“The end consumer is the ultimate sufferer of indirect taxes,” Sherani said adding that tax must be collected from industrialist and traders on sale of a product as they are the beneficiary who are earning from it.

Maulana Sherani held that all the indirect taxes are prohibited in Islam.

The economic system based on paper currency is not strong enough and gold is the more acceptable medium, he added.

“The paper currency is only based on the power of the state has and no standing in the shape of a solid material,” he said.

“The gold dinar coin was used in the Islamic world from the 8th century onwards and survived in certain parts till 19th century,” Sherani said.

The CII chairman said capitalism is about to fall after the collapse of communism and the world must opt for Islamic economic system to meet the challenges confronting the economy.

 

[livingdead]

I thought islam does not have income tax, only wealth tax.

 

[SBD-3]

I thought islam does not have income tax, only wealth tax.

Only Zakat(which is not a wealth tax because its charged only on earning assets and not on wealth for household use), and a tax from non-muslims for provision of stat's protection (which is non-existent now).

 

[livingdead]

Only Zakat(which is not a wealth tax because its charged only on earning assets and not on wealth for household use), and a tax from non-muslims for provision of stat's protection (which is non-existent now).

at what percent you need to pay?
does it mean a muslim need to pay only on income from rental of house and not the worth of house in the market? what about other income(from job/business etc)

 

[Zibago]

Indirect tax is jagga extortion tax you have to pay even if you are below the poverty line

 

[livingdead]

Indirect tax is jagga extortion tax you have to pay even if you are below the poverty line

that is true... how will you replace that govt earning though?

 

[Zibago]

that is true... how will you replace that govt earning though?

Remove indirect tax from everyday goods particularly those on edible and everyday usage and tax incomes so the right people are targeted and the poor dont get burdened because of tax evasion of the elite

 

[livingdead]

Remove indirect tax from everyday goods particularly those on edible and everyday usage and tax incomes so the right people are targeted and the poor dont get burdened because of tax evasion of the elite

but how will you make up the shortfall in revenue.. am not sure how much pak govt gets from indirect tax but it finds getting direct tax difficult... how will you get more people to pay direct tax. Indirect tax is easy to collect, comparatively, thats why pak govt does it... also people dont feel it so pay it readily.

 

[SBD-3]

at what percent you need to pay?
does it mean a muslim need to pay only on income from rental of house and not the worth of house in the market? what about other income(from job/business etc)

2.5% if the value of goods for above minimum threshold (Nissab).Rates differ for agricultural produce. Zakat is calculated not on income stream but the value of the earning asset. So the rent is not liable to zakat but the building earning rent is IMHO.

but how will you make up the shortfall in revenue.. am not sure how much pak govt gets from indirect tax but it finds getting direct tax difficult... how will you get more people to pay direct tax. Indirect tax is easy to collect, comparatively, thats why pak govt does it... also people dont feel it so pay it readily.

These kids don't really have any Fck'n clue. In Pakistan the black economy is humongous and offers ample opportunity to hide income. From prize bonds to real estate, black money has swarmed all. I bet that tax filers on this forum would not exceed the double digits (I being one of them )

 

[livingdead]

2.5% if the value of goods for increase the minimum threshold (Nissab).Rates differ for agricultural produce. Zakat is calculated not on income stream but the value of the earning asset. So the rent is not liable to zakat but the building earning rent is IMHO.

yes, so if you have a house worth 10 million pkr but earn annual rental income of 100,000 pkr you will pay 2500 pkr as zakat.
Suppose your income from salary is 500,000 pkr. how much will you pay on that?
I did not understand the nissab calculation.

 

[Zibago]

but how will you make up the shortfall in revenue.. am not sure how much pak govt gets from indirect tax but it finds getting direct tax difficult... how will you get more people to pay direct tax. Indirect tax is easy to collect, comparatively, thats why pak govt does it... also people dont feel it so pay it readily.

By increasing taxation and broadening the tax net indirect taxation hits the middle and lower middle class the most
I forgot where i read it but 75% of our tax revenue is from indirect taxation i am not totally against indirect taxes some items should have them but govt should remove them from items of everyday use

There should be solid measures taken to tax the wealthy many use foreign high value currencies and even gold to move money in and out of the country its a huge issues here we have the world lowest tax to gdp ratio in the world and govt is resorting to anti poor indirect taxation to fill the void instead of increasing direct taxation

 

[jamal18]

Indirect tax is jagga extortion tax you have to pay even if you are below the poverty line

That is an excellent point, I never thought of it.

You know, before a certain income level, a person doesn't pay tax because he is too poor. That is logical.

So how comes this same person has enough to pay indirect tax?

Incidentally, indirect tax ( 'sales tax' ) is used in countries where efficient administration and effective tax collecting methods don't exist.

 

[Zibago]

That is an excellent point, I never thought of it.

You know, before a certain income level, a person doesn't pay tax because he is too poor. That is logical.

So how comes this same person has enough to pay indirect tax?

Incidentally, indirect tax ( 'sales tax' ) is used in countries where efficient administration and effective tax collecting methods don't exist.

And those living below the poverty line have to suffer because of the incompetence of the authorities

 

[AUz]

So the government should tax the income of the businesses etc and not the firms/traders themselves?

Pakistan needs to develop an efficient system of tax collection so the government can invest in infrastructure, health, education, and military sector.

Pakistanis are such a waste of time tbh...we have no sense of our own good!

We all want to see ourselves as 'greats' on world stage--but we don't pay taxes and hence we can't even pay our bills. lol

 

[Shah01]

yes, so if you have a house worth 10 million pkr but earn annual rental income of 100,000 pkr you will pay 2500 pkr as zakat.
Suppose your income from salary is 500,000 pkr. how much will you pay on that?
I did not understand the nissab calculation.

If the house is Rs10 million than the Zakah will be 2.5% of 10 million pkr which is 250,000 pkr. So that is the Zakaah if I understand @SBD-3 correctly?