Islam designated certain types of property to be owned directly by the state. The main difference between state and public property shows in the way the property revenues are used. The public property is administered by the state but not owned by the state. The state may use revenues of the public properties to spend on state’s functions only when the state own revenue falls short of meeting its needs. The state property, on the other hand, gives the state full authority to spend as it sees fit to conduct its affairs and the affairs of the citizens.
Throughout the history of the Islamic state, the largest source of income for the state has been the revenue generated from the property ownership of land called Kharaj (the lands annexed to the Islamic state through war). Kharaj literally means output. The term kharaj replaced the term fai’i, which was used for the land annexed without a fight. Abu Obaid narrated in his book Al-Amwal on the authority of Az-Zuhri that Prophet Mohammad (PBUH) considered the lands of Bahrain after its conquest a land of Kharaj even after the people in Bahrain had converted to Islam.116 Kharaj land is defined as a land added to the territory of the Islamic state and whose ownership belongs to the state. The state grants the right to use the land for farming or development in exchange for a predefined fee. The fee is due to be paid by the user of the land whether he was able to benefit from the land or not. The fee is not in exchange for the product of the land; it is in exchange for the right to use it. If the user of the land is a Muslim, he still has to pay the Zakah portion of the products. If the user of the Kharaj land is not a Muslim, he only has to pay the Kharaj fee.
During the reign of Caliph Harun Ar-Rasheed,117 the land of the Islamic state was enormous due to the expansion of the state into Africa, Central and East Asia, and well into Europe. The caliph requested his chief judge Abu Yousuf 118 to write a book detailing the rules related to the wealth associated with the land of Kharaj, and to explain the various ways of spending the Kharaj money. Following the footsteps of Abu Yousuf, several other books on the subject of Kharaj were compiled.119 The famous book of Hadeeth compiled by Abu Dawoud, known as Sunan Abu Dawoud, contains a section titled “The Book of Kharaj.” Referring to the huge land of the caliphate state, Harun Ar-Rasheed once addressed a passing cloud over the city of Baghdad saying, “You may drop your rain wherever you wish; your Kharaj will eventually come back to me.” It was the second caliph Omar Bin Al-Khattab who first constituted the laws of Kharaj. Abu Yousuf narrated in his Kharaj book the following incident. In the year AH 16, the Muslim armies of the caliph Omar occupied a huge land in Iraq after the battle of Qadisiyyah. Prominent Muslim companions and army generals Bilal Al-Habasihi, Abderrahman Bin Awf, and Zubair Bin Al-Awwam divided part of the occupied land among the fighting soldiers. They treated the occupied land as spoils of war and thought to divide it among the fighters according to Islamic method for dealing with spoils of war. The caliph Omar had another opinion. He wanted the land to remain a property of the state and convert it into a land of Kharaj. After consulting with his advisers in Medina, Omar proclaimed,
I want to keep the land of Iraq and let the people who currently own it continue utilizing it in exchange for a Kharaj fee. The Kharaj money will be for all Muslims including the fighters, their offspring,
and the generations to come. I want the Kharaj money to pay for the cost of securing the long borders, and protecting the large cities of Sham, Jazirah, Basra, and Egypt. If we divide the land among the fighters now, the state will not be able to pay the salaries for the soldiers who will have to protect the land and the borders.
But for this opinion to become a law, Omar had to support his proclamation with an evidence from the Quran or the Sunnah of the Prophet, especially since the Prophet in a previous occasion did distribute the land among the fighters (the land of Khaibar, for example).
After consulting prominent scholars in Medina, Omar used verses 7-10 from Surah Al-Hashr (chapter 59) in the Quran to prove his point. The verses talk about the rules related to spoils of war including the land. Following is the text of the verses:
[59:7] What Allah gave as booty (Fai’) to His Messenger from the people of the townships—it is for Allah, His Messenger, the kindred of Messenger Muhammad, the orphans, Al-Masakeen (the poor), and the wayfarer, in order that wealth may not remain a fortune circulated between the rich ones among you. And whatsoever the Messenger gives you, take it; and whatsoever he forbids you, abstain (from it). And fear Allah; verily, Allah is Severe in punishment.
This verse establishes the principle that the returns of war are for the Messenger to use and distribute among the most needy ones (orphans, poor, wayfarers). The Messenger in this case is referred to in his capacity as a head of the state; the spiritual and religious aspect is covered by the part which refers the booty to Allah.
Furthermore, this verse established a major principle in the political economy in Islam which guards against the accumulation of wealth in the hands of the richest ones in the society. This is reflected in the portion of the verse which reads, “In order that it may not remain a fortune circulated between the rich ones among you.” The second verse in this series further describes the groups of people who are entitled to receive the dividends of the booty and proceeds of war. The first group is the poor among the Muslims who migrated from Mecca to Medina leaving all their wealth behind. They receive a portion of the spoils of war to help them get over the poverty status they gained as a result of the sacrifices they made.
[59:8] (And there is also a share in this booty) for the poor emigrants, who were expelled from their homes and their property, seeking Bounties from Allah and to please Him, and helping Allah (i.e.
helping His religion) and His Messenger. Such are indeed the truthful (to what they say).
The next verse describes the second group of people who are to receive a portion of the proceeds of war. This group belongs to the Muslims in Medina who subjected their wealth and property to sanctions imposed by Quraish and the Jews in Medina. They also shared their wealth with their fellow brethren who migrated from Mecca. For all of these sacrifices, they deserve to be compensated in order to keep them out of poverty.
[59:9] And (it is also for) those who, before them, had homes (in Medina) and had adopted the Faith, love those who emigrate to them,
and have no jealousy in their hearts for that which they have been given (from the booty), and give the emigrants preference over themselves even though they were in need of that. And whosoever is saved from his own covetousness, such are they who will be the successful.
The next verse is what caught the attention of Caliph Omar. It describes a group of people who are entitled to receive part of the proceeds of war, including the land, but this group is yet to exist. The group belongs to future generations who love and appreciate all what has been accomplished by the first generation of immigrants and hosts. Omar declared that this verse had established the right to own part of the returns of war for the future generations of Muslims. The fact that the verse did not specify a time period in which the group would live implies that all Muslim generations without any limit are entitled to receive dividends from the land gained through the war.
[59:10] And (it is also for) those who come after them and say:
“Our Lord! Forgive us and our brethren who have preceded us in Faith,
and put not in our hearts any hatred against those who have believed.
Our Lord! Yo u are indeed full of kindness, Most Merciful.
Citing these verses, Omar told the soldiers and generals who were in favor of distributing the land that the only way he can guarantee that the third group mentioned in verse [59:10] receives their rights is to treat the land as a Kharaj land; this way the wealth generated from the Kharaj fees will return to the state treasury. Then the state will spend this money in the best interest of the public. The companions of the Prophet unanimously agreed with Omar’s verdict and this has become the law. Abu Yousuf narrated in the Kharaj book that the Kharaj revenues from the southern part of Iraq during the reign of Omar reached one hundred million dirhams (a dirham is equal to 2.98 gram silver).
The majority of the land in the Muslim world is considered a Kharaj land. Examples of lands which are not subject to Kharaj include the islands of Malay, Indonesia, and the Arabian Peninsula. The Kharaj land in the Muslim world is extraordinarily large. The Kharaj revenues from this huge land are a significant source of income for the Islamic state.
Besides Kharaj, Islam designated other types of properties to be owned by the state. One such category is known in Islamic jurisprudence as Rikaz.
Rikaz refers to minerals and precious metals found in relatively small quantities beneath the ground. If such metals are found by any person, then he ought to pay one-fifth of the found material to the state. The rest is the property of the one who finds it.
The state is the sole owner of bare mountains and hills, beaches, deserts and wildland which has become bare and deserted over the years. The state also becomes the legal inheritor of anyone who dies without being survived by any legal inheritor. Note that the deceased may write no more than one-third of his wealth as a will to whomever he desires. Also part of the wealth of a deceased survived by only a spouse will go to the state. Any wealth acquired by individuals through fraud, illegal trade or acquisition, bribery, or any invalid means of growing wealth will be confiscated by the state and becomes the property of the state.
It should be noted that taxation is not a means for property acquisition by the state, and in principle, the state is not supposed to place taxes on the citizens. If the state cannot allocate the necessary wealth required to perform its functions, then it can use the wealth of the public property to account for any shortage or deficit. If both the state and public property fall short of meeting the needs, then the state turns to the wealth of the individuals and collect taxes. Taxation in the Islamic state is governed by the following principles. First, the taxation must be made to finance a project which is known to be an obligation upon the Muslim society, for example, to house and feed victims of a natural disaster (earthquake, tsunami and the like). Second, taxes are collected for specific projects and hence must be temporary and cannot be permanent. Third, taxes will be collected from the richest first. In any case, the state before imposing any taxes will provoke the Muslims’ eagerness to spend in the cause of Allah, so as to collect the required wealth through mere donations and contributions. The Quran made so many calls for Muslims to spend in the cause of Allah and to give generously. It is reported that Prophet Mohammad (PBUH) was able to finance most of the battles through volunteer contributions and charity.
It is therefore evident that the political economy in Islam recognizes the three types of property (private, public, and state). The triproperty structure provides a balanced mix between productivity, social responsibility, and society integrity. Individual property ownership provokes the innermost drives of humans to produce and own, while public and state property ownership makes up for any imbalance that could arise due to variations in skills, motivations, or abnormal conditions. While the individual property ownerships call for the prosperity and well-being of many in the society, the public and state property guards against the persistence of poverty.
