Bahrain to introduce personal and corporate taxation

30 Jan, '07

MP Ibrahim Busandal, the Asalah MP, wants to introduce mandatory Islamic taxation (zakat). Here are his justifications for doing so:

  • Zakat is one of the pillars of Islam. Muslims are obliged to do it
  • this would help reduce poverty and activate the economy because it would give poor people more purchasing power
  • Mr Busandal said he wants to apply the Sharia rules
  • It will be a project that would pay for itself
  • would only impose the law on Muslims and not people of other faiths. The requirement would also be imposed on Muslim-owned companies

Questions:

  • Who’s interpretation is he going to use for the zakat? Sunni or Shi’i shari’a? Shouldn’t we get parliament to work under one set of rules first?
  • Does the application of the zakat on Muslims imply that we will have a declared “Dhimmi” populace and that they (ultimately) will have to pay “Jizya” too?
  • Who’s going to administer it?
  • Who’s going to oversee the operation?
  • Who’s going to decide who gets it and by how much?
  • How is giving money going to solve the poverty problem? Shouldn’t we concentrate on education and provision of employment first?

I wonder if this guy actually made a study of how his proposal will impact the country’s economy and society; or is his Islamism the only factor that tickled this fancy.

I bet that even with the low taxation of 2.5% proposed a lot of companies will be even more hesitant to open and stay in Bahrain. Even with that; however, I would support taxation provided that there is better transparency and a more inclusive and true representation of tax payers in the decision making process. That means a more representative parliament with proper and equitable distribution of electoral districts and a proper transparent oversight on how this is going to be implemented and managed. Other than that, this proposal is just hot air apart from it being unimplementable.

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Comments (24)

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  1. Butterfly says:

    Oh what a great idea!

    And then we have to solve the 2.5% and 1/5 difference between Shai’a and Sunna.

    May be we can develop his idea later on and make the five prayers mandatory, what about hiring watchmen to ensure that all bahrainees are praying??

    Old MPs and new MPs, the most genius mentality!

  2. nibaq says:

    They are trying the same thing Kuwait for companies but it is from the Sunni side. The Shia are actually against it due to their own zakat system.

  3. Butterfly says:

    Can someone write this smart MP a letter and ask him to drop the interest % (Reba) on loans? :angel:

  4. mahmood says:

    click his picture for his full contact details and write away!

  5. Bugs says:

    Imposing taxes on the hardworking people will not solve poverty. In Sweden we have social welfare as well as high taxation, which has led to a lot of people staying at home watching television and a lot of companies moving to China. If we start to implement a similar policy in Bahrain it will lead to a lot of people cruising around in their cars and a lot of foreign companies leaving the country. What this guy seems to forget is that Bahrain is not a secular country and it has biased judiciary. Moreover, the reason why a lot of companies have chosen to operate in Bahrain is because it is a tax free country otherwise they will not have set foot there in the first place. From my point of view if we trim the allowance that the ruling family gets from oil we can use that to invest in projects that might solve the problem.

  6. Costa-guy says:

    First of all, he should admit that Shi’ia are muslims, then convince the royal family and the wealthy people of bahrain to pay 2.5% of their fortune to poor people and support the law. Then separate the liberals & non-muslims. Then sit with Shi’ia clerics and discuss which way they would choose (which won’t happen) and then go through our bureaucracy system in the parliment and government to impose the whole thing.

    And in the end, you realise that 90% of Bahrainis need “zakkat” and by shari’ia laws they are spared paying the “zakkat”. And does he think that the rest 10% will pay “zakkat”?

    حجي فاضي وهوا حار

  7. Finlandi says:

    Bugs “In Sweden we have social welfare as well as high taxation, which has led to a lot of people staying at home watching television and a lot of companies moving to China.”

    Finland is currently in the same situation, unbelievably high taxes, which result in people not being able to do much with the money they have.. and most of the people that get the money are discouraged from working because its easier to “bum” off the government than to work at minimum wage and pay taxes.

  8. Costa-guy says:

    هاك تقرير الرقابة المالية، هاك طلع منه زكاة وحل مشاكلنا يا فالح

  9. Bugs and Finlandi

    You have both hit upon and very important issue that is not only happening in your respective nations but in the US as well. At what point does social welfare stop being a helping hand to those that need it and then becomes a drug that has people dependant on the system from cradle to grave?

    Tax the rich and give to the poor sounds Robinhoodesque but the fact remains it isn’t only the rich who wind up being taxed it is the middle and lower middle class which in turn hurts their chances of moving forward. Whether these tax revenues come from income or “sin” taxes once government gets its hands into the pie the taxes will never stop. There will always be some new “cause” and the claim the poor “only need a little more help. Just a little more or my favorite one.. IT’S FOR THE CHILDREN. Meanwhile your working harder.. taking home less and often seems those on welfare are sitting at home watching Ophra and eat Bon Bons and waiting for their check to come in the mail. Many many of them being fully capable of doing some honest work.

    Resist the idea of an income tax Bahrain. Once it happens you won’t be able to take it back.

  10. Hisham says:

    Wooow… Hold on a minute, bucko Busandal… faith is a personal matter, and that includes the pillars of Islam. Let me pay zakat, khums or whatever else my religion dictates, but please don’t try to mix it up with government beaurecracy.

    Think of it this way: next you’ll be installing CCTV to make sure people pray on time.

    In other words, your “I’ve got a brilliant plan” idea Mr. Busandal is absurd. If we need to create taxation (but considering the health of our national accounts, there does not seem to be a compelling argument for it at the moment,) corporate or otherwise, let us do so, but please don’t say it has anything to do with religion. Once again, religion is a personal matter.

    To activate the economy and to help poor people, maybe we should first try to create an environment where transparency and accountability prevails in the higher echelons of our government. Then we can see that five million dinars spent on unnecessary roadworks and “ill”-planning could have been directed towards helping the poor and the underprivilliged. Kapisch?

  11. Butterfly says:

    Well said .. Hisham

  12. Butterfly says:

    and CCTV is difintely better than watchmen :sideways:

  13. Ahmed says:

    WOW i was reading the paper this morning and was amazed at this persons suggestion, dont get me wrong i fully support the idea of Zakat be it the 2.5% or the Khums.
    But in all honestey how many of Bahrainis does this guy think have enough money left over after each months salary that they can give zakat at the end of the year??!. Before making it mandatory i think it would be first wise to raise the standard of living of the people give them better incomes and the respect they deserve.
    Seriously i had high hopes for these new MP’s but alas its the same old story getting caught up on stupid crap (e.g. the recent fiasco about which luxury car they should get) and blurting uneducated propositons without holding any studies or inqusitions.

    Like i said i support such an idea, but before such a thing is implemented it needs to be thought out and not just blabbered out in a whim.

  14. isagreatphilosopher says:

    I am sending this guy an email, I shall tell you guys how he responds.

    I am for some tax/welfare system. But I am not talking about a Scandanavian level, that is just an extreme. US-UK have taxation, and the UK has a welfare system, I’m not sure the US system really compares to UK, Germany, or Scandanivian welfare systems.
    As I asserted in another post, until we compensate for less freedom as a result of taxation by freeing up labour market and other aspects of our economy such a move will have dire economic consequences.

    On another note : Mahmood, here is title you should consider for your next blog-ticle, “is secularism the only solution?”

  15. Thogba says:

    Taxation is good but Bahrain is not in honest hands, is it? It’s a corrupt country.

  16. jasra jedi says:

    Thogba,

    You know, I read alot on these posts. And, sometimes I laugh, sometimes I am sad, sometimes I giggle and sometimes I get incredibly homesick.

    But, when I read your posts, the only thing I can feel eminating from you is MISERY. In the pure, evil, miserable, hopeless, suicidal sense of the word.

    Do you not know the meaning of hope?

    Is EVERYTHING that the current government is doing wrong? and wicked? and tarnished?

    And if the answer to that is yes, do you really, honestly beleieve, that a change in players will change the nature of the game?

    Do you really honestly think that a new set of Shia Islamic clergy for leaders is going to make Bless corrupt?

    If the answer is yes, then look at Egypt after Sadat’s coup. And Iran after Saddam. And Iran after Khomeini. And Syria after Assad. What was miserable before, remained miserable after.

    And, if you dont want to look externally, then please run a quick look over the books of Al Awqaf Al Jaffariya (and Al Sunniya) and tell me , in ALL honesty, whether you think these self appointed religious idiots are really, morally, spiritually and financially any different than the ruling family. Or any other leadership anywhere in the world.

    For God’s sake … the hate that you feel will eat you alive and destroy whatever soul you may have left. You have already gone over to the dark side.

    (Darth .. please change your name to Yoda. Not that Thogba deserves the accolade, but, I think I will have to shoot myself if I have to read any more of his comments).

  17. milter says:

    isagreatphilosopher,

    You write:

    But I am not talking about a Scandanavian level, that is just an extreme.

    Being one of the victims of that system I can only agree with you. Paying more than 60% of the last 2/3 of ones salary hurts. Adding a 25% VAT on everything you buy doesn’t make it less painful.

  18. can we talk says:

    milter,
    but correct me if i’m wrong, you have no gap between the high class and the low class (actually you have neither really, more a huge middle class), wonderful health care, great public services, great education, a generous unemployment allowance all free of further charge, right up through university and and and..
    and in return for that

    the cost for that is that ambitious people go abroad and lazy people even those from other countries get attracted to you. the latter get a nice fat check for doing f-all while you work very hard at your job for a little bit more than them and to provide them with their check, which is not a great motivator for hard work.

    I have never been to your country but please correct me if any of the above is wrong.

    having the vantage point of experiencing this type of economic system, what do you see as the best economy?

  19. Maverick says:

    What an inspiration this guy is huh? :whistle:
    Is he also going to make sure that husband do not beat their wives or are treating them farely as Islam dictates.Is is going to make sure that divorced women get their rightful share? Is he going to make sure that the money taken for zakat is not misused by the very body that will be set up to monitor and control it? See what happend to the famous GOSI system. they made goozi out of it? :angry:
    Why did he not volunteer to give up 2.5% of his salary and his expensive car as zakat first…. :angel:

  20. Butterfly says:

    but correct me if i’m wrong, you have no gap between the high class and the low class (actually you have neither really, more a huge middle class), wonderful health care, great public services, great education, a generous unemployment allowance all free of further charge, right up through university and and and..
    and in return for that

    and you can also interrogate your government and question them on how your tax is spent .. can we question our government now or even after we implement taxation??

  21. farah says:

    I have only one suggestion for Busandal…rather than to come up with
    genius ideas to be seen as the “little hardworking MP that could”…go find your other sandal…

  22. Anonymous says:

    :sleeping:

  23. milter says:

    can we talk,

    Your perception of Denmark is in many ways bang on. Compared with many other places in the world the Scandinavian economic system must look like heaven on earth, or at least the closest you can get.

    One of the persons that has had a great impact on the Danish understanding of a “just society” is Nikolaj Frederik Severin Grundtvig. His vision can best be described by these words from one of his songs where he says that we have achieved a lot when “few have too much and fewer too little”.

    Those words were written in 1820 and I’m sure he would have been delighted to see Denmark of today. Among his achievements was the establishment of “Folk high schools”, based on his ideas of education.

    However, I don’t think he could have predicted one of the side effects of the “redistribution of wealth” (i.e. taxation) when it goes as far as in Scandinavia of today. You point at it yourself with these words:

    the cost for that is that ambitious people go abroad and lazy people even those from other countries get attracted to you. the latter get a nice fat check for doing f-all while you work very hard at your job for a little bit more than them and to provide them with their check, which is not a great motivator for hard work.

    Although it is a bit simplified to put it that way there is some truth in it. The result of knowing a big safety net will catch you if you fall, regardless of whether you “mind your steps” or not, can lead some people to believe they don’t have any responsibility towards themselves or their fate. It is actually quite common in Denmark for people to claim that “society is responsible for my ill-fated situation”.

    At the moment we have a right wing government. They are trying to change some laws that mean that some unemployed people will actually go down in available income if they take up a job. They have met strong resistance from the opposition on this.

    In my opinion the “Scandinavian model” has gone too far. It has put many people in a position that can in many ways be compared to that of wild animals in a zoo. They are being fed every day, they don’t have to go out and look for shelter, they don’t have to worry about predators, etc. If they were put back in the wild they wouldn’t be able to look after themselves and would probably die very soon.

    Now, I’m not trying to compare life on the African savannah to living as a citizen in Denmark, but I hope you understand the analogy.

    Some sort of taxation is necessary for a society to work and I agree that the wealthy people should contribute more than the poor. In my opinion a country can only be judged on how it treats its poorest and weakest members.

    The question is how far you should go in order to minimize the gap between rich and poor. My view may be coloured by the fact that I belong to the better off group, but more and more people are beginning to see it like me. They are being convinced by looking at their paycheck. It isn’t very motivating to work overtime for instance when you know there’s only 35% left of your pay for it after tax.

    And tax should certainly not be based on religious beliefs. That can only contribute to widening the “us and them” conflict.

  24. milter says:

    can we talk,

    Just a few more comments to clarify my views.

    I believe taxation and distibution of the revenue should be based on the principle that all citizens of a country are equal, i.e. that everybody is entitled to some of the benefits, such as old age pension, regardless of their wealth or income.

    As long as having to pay tax is only based on the idea that “we must help the poor and needy” it will be seen as charity which will not help the unfortunate ones in seeing themselves as equal partners of a country.

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