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Potential Effects Of Zakat On Government Budget

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  • Monzer Kahf

Abstract

This paper attempts to study the potential direct and indirect effects of zakat implementation on the Government's budget within the context of contemporary society. In developing the arguments, seven assumptions are made in the article, and the case of pakistan is taken as an example. The author argues that there is a potential direct substitution effect of zakat in replacing certain items of the Government budget that corresponds to the seven recipients of zakat. Hence, the the amount of zakat proceeds spent on them must reduce an equivalent amount in the budget, thus making it possible to release budgetary revenues for other social needs. In addition, the author argues that there are also potential indirect efects of zakat implementation on productivity and the ability to be taxed, on aggregate consumption and investment, on empolyment, and on the amenability of zakat to be a tool of government economic policy.

Suggested Citation

  • Monzer Kahf, 1997. "Potential Effects Of Zakat On Government Budget," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 5(1), pages 67-85, June.
  • Handle: RePEc:ije:journl:v:5:y:1997:i:1:p:67-85
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    File URL: http://www.iiu.edu.my/enmjournal/vol5no1.pdf
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    Cited by:

    1. Zafar Iqbal & Mervyn K. Lewis, 2014. "Zakat and the economy," Chapters,in: Handbook on Islam and Economic Life, chapter 23, pages iii-iii Edward Elgar Publishing.
    2. Abdul Rahman, Abdul Rahim, 2007. "Pre-Requisites For Effective Integration Of Zakah Into Mainstream Islamic Financial System In Malaysia," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 14, pages 92-107.

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