Munich Personal RePEc Archive

Economic rationale for the state collection of zakah

Iqbal, Zafar (2000): Economic rationale for the state collection of zakah. Published in: International Journal of Islamic Financial Services , Vol. 2, No. 1 (1 June 2000)

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This article advances arguments in favour of the state collection of zakah by elucidating the public good character of the rationale for redistribution. It then explores the potential of zakah as poor due in comparison to that component of the state income transfers in the U.S. that are targeted specifically at the poor. The data for 1990 exhibit that means-tested payments are around 2.5% of the US national income that equals to the lower bound of the zakah rate. One can safely infer that the potential of zakah is not that limited as some critics have been suggesting in the past.

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