Taxes, Morality and Ethics of Wealth Distribution

By Rashid Samnakay, New Age Islam

07 April 2016

The ‘Panama Papers’ which leaked thousands of names of corporations and rich individuals round the world, hiding their wealth in so called ‘tax havens’ to minimize paying income tax in their own countries, seems to have stirred hornets’ nest. In particular the question of corporate and individuals’ morality, ethics and of being responsible citizens is now foremost in many ordinary peoples mind.

The first casualty of this has already occurred that of the Prime Minister of Iceland Sigmundur Gunnlaugsson who has resigned his post following street protests in the capital.

What does it signify in terms of national values of the citizens of Iceland and the individual at the centre of protest, that is, the Prime Minister Gunnlaugsson?

A small country of just over three hundred thousand people is one of the wealthiest and advance republics in Europe, with lowest taxation regime and perhaps cradle to grave social welfare system. So why would anybody try to hide ones assets in offshore safe haven? Yet within few days of publication of the leaked papers the Prime Minister resigns because the people demanded of him to do so. Having gone through and survived the banking scandal of the last Financial Crisis, transparency and integrity of officials was what they wanted.

In many countries it is required that the members of Parliament, declare their assets to the relevant authorities and for public scrutiny. In spite of this requirement, in many countries it is hardly ever enforced or implemented.

Laws are made by the lawmakers for others to obey. The standard sentence quoted by them when wrong doings are discovered, is set in concrete, vis “We have done nothing wrong”.

(For comparison, see these– sarawakreport.org/2016/04/iceland-vs-kuala-lumpur-two-snapshots-as-we-reveal-najibs-spendthrift-bank-statements-exclusive-images/?utm_source=Sarawak And  bbc.com/news/world-asia-35959895)

But ethical standards when synchronize with moral values is when it makes it easy for a person of conscience to decide whether it was right or wrong.

It is a human experience that any government can make laws so watertight that there is no conflict between ethics to follow the law of the land and obeying the inner voice—the conscience—the morals that guides a person to choose to do the right thing.

On the particular issue of paying ones fair share of legally imposed tax on earnings on wealth that was initially accumulated within the country and then siphoning that wealth to a safe haven to minimize or even not pay any tax, however legal, is where the conflict between ethics of legality and morality of acting as a good and responsible citizen to one’s ‘home country’, comes into play.

The rulers and lawmakers of home country deprive it this tax revenue, then put extra burden on the ordinary taxpayer; generally those in the service industry whose taxes are deducted upfront to make the shortfall, in order to provide the necessary benefits and services to the citizens. These benefits and services were often “promised” during election campaigns. Ultimately these shortfalls bring the State where its treasury lacks the funds to fulfil the promises they made.

The downward spiral of Poverty related issues, such as corruption and crime then takes hold and the whole economy suffers. There is an exodus of people to greener pastures. These people often are the ones with brains and skills and hence a compound effect manifests itself in what is called the “brain-drain”! These are just some simple examples for a layperson to comprehend.

What the elite fail to understand or perhaps they do understand, that their immoral action has this inevitable reaction affecting the whole nation, but they have deadened their inner voice. Their crime though legal, then is magnified many times as it is not only a theft of the nation as a whole but of inflicting a lower standard of moral character for the nation to adopt in order to survive. The inevitable outcome of poverty! Hardly any Muslim country in the world and its elite has escaped the list of Panama Papers!

The shameful ‘begging bowl’ label is often pined to the countries’ Muslim leaders visiting Western nations, asking for ‘Aid’ from them to fulfil the promises they themselves had made to their citizens during their election campaigns.

It is fair to ask what is then the moral criterion or datum for Muslims to adopt and follow in order to avoid the spiral of poverty and maintain their dignity in world view. Is it enough to say that we are no different to the all the other countries of the world and leaders whose names are given on the Panama Papers? This is just a worldwide phenomenon that we follow.

Then why are some Muslim countries proud to name themselves ‘Islamic’ or claim to be followers of … ‘Sharia’: Sharia of indignity, wealth accumulation, greed, abrogation of citizen responsibilities and much more!

For Muslims, if they are followers of their datum, their code Book the Quran which they uphold as their scripture and swear their oaths on it, they must know the fundamental command of Islamic economics given on the very first page of the main body of the Book- the chapter two verse three:

 وَمِمّا رَزَقٗناھُمْ یُنْفِقُوْنَ –and distribute freely what We have provided for them 2-3. This is the first of the definitions of a Believer.

The Muslim Churches and their operatives have distilled the wide ranging all-encompassing command down to simple instruction of ‘feed the poor’! The best they have come up with is the two and a half percent (2.5%) religious levy many call ‘poor due’ mainly paid to their churches.

The practical demonstration of that is feeding the poor in the evening during the month of fasting. The rest of eleven months of the year the poor just do not exist.

The verse 2-3 is the fundamental on which the entire Islamic society is supposed to exist. The wealth and its equitable and free distribution are then further elaborated with the command of Zakat which is what the churches have manipulated as the virtue of charity–the poor due in order to escape the State levy of Income Tax.

The tax revenue is the main feature of the economy of any State, Muslim or not. It cannot function without this income to provide the necessary provisions to its citizen which it is obliged to do. The exceptions are the States, which are blessed with immeasurable natural resources so as to function successfully without levying any taxes.

But the State is not a charitable organization that is left to function on the voluntary goodwill of its citizens.

Charity is demeaning to the receiver and the code of Islam commands the State for the establishment of a system to ensure that human dignity is not violated by receiving charity.  وَاَتُوالزَکاوتہ and proffer Zakat, the tax; as against offer, as an act of worship or devotion for holy reward; is not the function and obligation of a responsible State.

Hence, if a State enacts its laws to fulfil its obligations to its citizens, it is incumbent on the citizens,—the lawmakers included– to act within the spirit of the law and not to benefit from the loopholes that may exist in the law. Although that may be legal and therefore can be construed as ethical but certainly it is not moral: a value that is well beyond any States’ ability to instil in its citizens.

“We have done nothing illegal” is not an excuse acceptable to the Code Book. For the sustenance Rizq to be Halal– allowed, it has to be legal, moral and wholesome in every respect- that is to say, Tayyeb.

A regular contributor to New Age Islam, Rashid Samnakay is a (Retd.) Engineer

URL: http://www.newageislam.com/spiritual-meditations/rashid-samnakay,-new-age-islam/taxes,-morality-and-ethics-of-wealth-distribution/d/106901

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