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The system of budgeting followed in the Islamic state is that a fair estimate of revenues from all the resources of the state is carefully prepared and then distributed for various categories of expenditures. Thus, in the Islamic State the basis of budgeting is the revenue, which determines the amount available for expenditure. In simple words, the system of Islamic budgeting is based on the maxim: “cut your coat according to your cloth.” Expenditure is determined in accordance with the quantum of revenues available on account of taxes and other sources of income of the Islamic State. On the other hand, the budgeting system being followed these days in modern states of the world is just the opposite. According to the modern system of budgeting, an estimate of expenditure under various heads is prepared and then ways are found to raise the required finances by manipulating various taxes and sources of income of the state in order to balance revenue with the expenditure. Thus, the noticeable tendency on the part of a modern state is to incur expenditure beyond its means. Huge expenditures under various heads are undertaken despite scarcity of resources, which result in substantial deficits. These deficits are financed through internal and external borrowings, printing of currency notes, etc. which lead ultimately to inflation and sometimes to recession and economic depression.

On the contrary, the Islamic budgetary system is simple, convenient and logical. In this system we cut our coat according to the cloth available. Thus, we do not outstrip our means. Expenditure is according to the revenue available. The budget is normally a surplus or at least a balanced budget. There is no need of loans or printing of notes for deficit financing. Thus, the Islamic system provides safeguards against the dangerous tendencies inherent in the modern budgets such as heavy debts, inflation, and cyclic depressions and recessions.

Islam is religion of moderate or middle way. In spending, the Qur’an has condemned miserliness as well as extravagance, while moderation in expenditure has been recommended. Al-Qur’an says:

1. And let not thy hand be chained to thy neck nor open it with a complete opening lest thou sit down rebuked, denuded. (17 : 29)

2. An those who, when they spend, are neither prodigal nor grudging; and there is ever a firm station between the two. (25 : 67)

The principles laid down by the Qur’an regarding moderation in expenditure are observed while preparing estimates of public expenditure by the Islamic state at the time of budgeting.

Since the Islamic Shariah has prescribed the items of expenditure in respect of certain categories of revenues, the classification of expenditure follows the lines of revenue. In the Islamic State, the revenue derived is either from Zakat and Sadaqat or from other sources like Jizyah, Kharaj, etc. Therefore, the broad classification of the revenues in the Islamic state is as follows:-

1.  Zakat and Sadaqat.

2.  Ghanaim or Spoils like Khums and Fai.

3. Revenues from Jizyah, Kharaj, Import duties, and other financial imposts and extra-Sharaih taxes.

The following principles of public expenditure have been laid down by Majallah, the Ottomon Civil Code, which is based on Sunni Fiqh:

1. The principal criterion for all expenditure allocations should be the well-being of the people;

2. The larger interest of the majority should take precedence over the narrower interest of a minority;

3. The removal of hardship and injury must take priority over the provision of comfort.

4. A private sacrifice or loss may be inflicted to save a public sacrifice or loss and a greater sacrifice or loss may be averted by imposing a smaller sacrifice or loss.

5. Whoever receives the benefit must bear the cost.

All the above mentioned five principles should be strictly observed while making expenditure allocations to various sectors and heads of expenses. Rule 2, 3, 4 and 5 can also be applied to taxation.

The revenues which accrue to the Bait-ul-Mal of the Islamic state have been placed by the classical jurists of Islam under three categories. They are :

(1) The ‘Zakat’ and ‘Sadaqah’ revenues; (2) the ‘ganimah’ revenue or spoils of war; (3) the ‘fai’ revenues such as Jizyah and Kharaj.

Since the revenues falling under the second and third category are no longer available to a modern Islamic state, the same would be substituted by the modern taxes.

The above mentioned classes of revenue are maintained distinctly under separate heads or titles by the Bait-ul-Mal as the items of expenditure to which they can be allocated are different in Shariah.



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