The Khaleefah Constitution:

The Economic System

Article 119 Economic policy is the view of what the society ought to be when addressing the satisfaction of its needs, so what the society ought to be is taken as the basis for satisfying the needs.

Article 120 The fundamental economic question is how to distribute funds and benefits to all subjects of the State, and to facilitate all the subjects to utilise these funds and benefits by enabling them to strive and possess them.

Article 121 Every individual must have his basic needs provided for completely by the State, and it must facilitate to the highest possible level the consumption of non-basic needs.

Article 122 Allah is alone the owner of property and He has gifted it to human beings. By this general donation mankind has acquired the right to possess property. As a consequence of Allah’s (swt) permission for the individual to possess property, man has the actual possession.

Article 123 There are three types of property, they are: private property, public property, and State property.

Article 124 Private property is a divine rule determined by the substance of the property or the benefit from it. As a result of this possession, the person who possesses it obtains a benefit from it or receives a price for it.

Article 125 Public property is the shar’a permission for the community to participate in obtaining benefit from the property.

Article 126 State property comprises all property whose expenditure is determined solely by the view of the Khaleefah and his ijtihad, such as: the funds of taxes, land tax (kharaj) and head tax (jizya).

Article 127 Private property consisting of liquid and fixed assets is restricted by the following divine causes: a. Work b. Inheritance c. Acquisition of property to survive d. A donation from State funds to a citizen e. Funds obtained by individuals not by effort or through purchase.

Article 128 The disposal of property is restricted by the permission of the Legislator, i.e., Allah, (swt) whether it is spending or investing of property. Squandering, extravagance and miserliness are forbidden. Also forbidden are the Capitalist companies, co-operatives, all other illegal transactions, usury (riba), fraud, monopolies, gambling and the like.

Article 129 Tithed land (al ushriah) constitutes land within the Arabian peninsula and land whose owners had embraced Islam, whilst possessing the land, before the Islamic State encountered them by jihad. Tax land (al kharajiah) is all land, other than the Arabian peninsula, which was opened by jihad, i.e., war or reconciliation. Al ushriah -land, together with its benefits, is owned by individuals. Al kharajiah land is owned by the State, and individuals own its benefits. Everyone has the right to exchange, through shar’a contracts, tithed land and the benefits from tax land. All people can inherit these, the same as with other properties.

Article 130 Uncultivated land is acquired by giving life to the land, i.e., irrigating it, or by protecting it, i.e., erecting fencing. Cultivated land can only be acquired by way of shar’a causes, such as: inheritance, purchasing it, or through a donation from the State. 

Article 131 Leasing land, whether al ushriah-land or al kharajiah-land, for agriculture is forbidden. Sharecropping of land planted with trees is permitted, and sharecropping on all other land is forbidden.

Article 132 Every landlord is obliged to use his land, those who are needy are to be given a loan from the treasury (bayt al-mal) to facilitate this. Anyone who leaves his land fallow, i.e., does not use the land, for three years will have it taken from him to be given to another.

Article 133 The following three categories constitute public property: a. Public utilities, such as the town square. b. Vast mineral resources, like oil fields. c. Things which, by their nature, preclude ownership by individuals, such as rivers.

Article 134 Factories by their nature are private property. However, they follow the rule of the product manufactured within it. If the product is private property, the factory is considered to be private property, like a textile mill. If the product is a public property, like iron ore, then the factory is considered to be a public property.

Article 135 The State has no right to change private property into public property, because public property is determined by its nature and not by the view of the State.

Article 136 Everybody in the State has the right to utilise public property, and the State has no right to allow any individual to singularly possess, own or utilise public property.

Article 137 The State is allowed to protect uncultivated land or public property on behalf of any of the citizens’ interests.

Article 138 Hoarding funds, even if zakah is paid on it, is forbidden.

Article 139 Zakah is collected from Muslims on their properties that are specified by shar’a, i.e., money, goods, cattle and grain. It is not taken from anything not specified by the shar’a. Zakah is taken from every owner whether legally accountable, i.e., mature and sane, or not, i.e., immature and insane. It is recorded in a specific account of the bayt al-mal and is not to be spent except on behalf of one or more of the eight categories of people mentioned in the Glorious Qur’an.

Article 140 Jizyah (head-tax) is collected from the non-Muslims (dhimmis). It is to be taken from the mature men if they are financially capable of paying it. It is not taken from women or children.

Article 141 Kharaj (land-tax) is collected on al-kharajiah land according to its potential production. However, in respect of al ushriah land zakah is payable on it on the basis of its actual production.

Article 142 The Muslims pay the tax that shar’a has permitted to cover the expenditure of bayt al mal, on condition that it is levied on that which is surplus to the individual’s conventional needs. The tax must be sufficient to cover the demands of the State. Non-Muslims do not pay any tax except the jizya.

Article 143 The State has the right to collect tax from its citizenry when the funds of bayt al mal are inadequate to cover the expenditure required to undertake all the functions the shar’a has obliged the Muslims to perform. The State is not allowed to impose a tax on the people for a function the shar’a has not obliged the Muslims to undertake. Thus, the State is not allowed to collect fees for the courts or departments or administrations, or for accomplishing any interests.

Article 144 The budget of the State has permanent sources decided by the Ahkam Shari‘ah. The budget is further divided into sections. The funds assigned to each section and the matters for which the funds are allocated are all decided by the view of the Khaleefah and his ijtihad.

Article 145 The permanent sources of income for bayt al-mal are: spoils (faya), jizya, kharaj, a fifth of the buried treasure (rikaz) and zakah. All these funds are collected, whether there is a need for them or not, on a perpetual basis.

Article 146 If the revenue derived from the permanent sources of income for bayt al-mal are insufficient to cover the expenditure of the State, it is permitted to collect taxes from the Muslims to cover the expenditure obliged on bayt al-mal. The obligations are the following: a. The needs of the poor, the needy, the travellers, and to perform the obligation of jihad. b. Remuneration of the salaries of the employees, the rulers and the provisions for the soldiers. c. Providing benefits and public utilities, such as constructing roads, extracting water, erecting mosques, schools and hospitals. d. Meeting emergencies, like natural disasters, famine, floods and earthquakes.

Article 147 Income derived from: public and State property, people dying without heirs and customs levied at the state’s borders (thoghoor), are all recorded in bayt al-mal.

Article 148 The expenditure of bayt al-mal is distributed among the following six categories of people as follows: a. The eight categories of people entitled to partake of the zakah funds. If there are no funds in this chapter they are not given any money. b. The poor, the needy, the travellers, the debtors and jihad are funded from the permanent sources of revenue whenever there are insufficient funds in the zakah account. When there are inadequate funds from the permanent revenues, the debtors are not to receive assistance. The poor, the needy, the travellers and jihad must be funded from the taxes collected for this purpose; and if required - to prevent them from falling into corruption - they are to be funded from loans raised by the State for this purpose. c. Bayt al mal must fund those people who perform certain duties or services for the State, such as employees, rulers and soldiers. If there are insufficient funds for this purpose, taxes must be collected immediately to meet their expenses, and loans should be raised if it is feared that corruption might ensue. d. Bayt al mal shall fund the essential services and utilities such as the roads, mosques, hospitals and schools. If there are insufficient funds, taxes must be collected to cover their cost. e. Non-essential services and utilities are funded by bayt al mal, but when there are insufficient funds available they are not financed and accordingly delayed. f. Disasters, such as earthquakes and floods, must be financed by bayt al mal; if there are insufficient funds available, loans are to be raised immediately, and will be repaid later from taxes.

Article 149 The State should provide employment for all subjects holding citizenship of the State.

Article 150 Company employees and the self-employed have the same rights and duties as employees of the State. Everyone who works for a wage, irrespective of the nature of the work, is considered an employee. In matters of dispute, between employer and employee over salary levels, the salary level is to be assessed on the basis of the market. If they disagree over something else, the employment contract is to be assessed according to the rules of the shar’a.

Article 151 The salary is to be determined according to the benefit of the work and employee, and not according to the knowledge and/or qualification of the employee. There are to be no annual increments for employees. Instead, they are to be given the full value of the salary they deserve for the work they do.

Article 152 The State is to guarantee the living expenses of those who have no money, no employment and no relatives responsible for them. The State is responsible for housing and maintaining the disabled and handicapped people.

Article 153 The State must endeavour to circulate wealth among all the subjects and forbids the movement of wealth among only a sector of society.

Article 154 The State tackles the task of enabling every subject to satisfy his non-basic needs, and to achieve equality in society, in the following way: a. The State grants all subjects liquid and fixed assets from those deposited with bayt al mal, and from the war booties, etc.  b. The State donates from its cultivated land to those who have insufficient or no land. Those who possess land but do not use it are not given land. Those who are unable to use their land are given financial assistance to enable them to use their land.  c. Those who are unable to settle their debts are given funds from zakah, and the war booty, etc.  d. The State donates from the public property to enable its subjects to satisfy their non-basic needs and to achieve equality in society.

Article 155 The State supervises agricultural affairs and their products in accordance with the needs of the agricultural policy, whose objective is to fulfil the potential of the land to its greatest level of production.

Article 156 The State completely supervises the affairs of industry. It undertakes those industries included as public property.

Article 157 International commerce is assessed on the basis of the citizenship of the trader and not the origin of the goods. Merchants from countries in a state of war with the State are prevented from trading in the State, unless given a special permission for the merchant or the goods. Merchants from countries that have treaties with the State are treated according to the terms of the treaty. Merchants who are subjects of the State are prevented from exporting strategic and needed materials. However, they are not prevented from importing any property they own.

Article 158 All individual subjects of the State have the right to establish research and development laboratories connected with life’s affairs. The State should also establish such laboratories.

Article 159 Individuals are prevented from possessing laboratories producing materials that could harm the public interest or cause harm prohibited by Shari‘ah.

Article 160 The State provides free health care for all, but it does not prevent private medical practices nor the sale of medicine.

Article 161 The use of foreign capital and its investment within the State is forbidden. It is also prohibited to grant franchises to foreigners.

Article 162 The State issues its own currency, which is independent of all foreign currencies.

Article 163 The currency of the State is to be restricted to gold and silver, whether minted or not. No other form of currency for the State is permitted. The State can issue coinage not of gold or silver provided that the treasury of the State (bayt al-mal) has the equivalent amount of gold and silver to cover the issued coinage. Thus, the State may issue coinage in its name from brass, bronze or paper notes etc. as long as it is covered completely by gold and silver.

Article 164 It is absolutely forbidden to open banks. The only bank permitted is the State bank which is a department of bayt al mal. It does not deal in usury (riba) and its function is to provide financial loans in accordance with the Shari‘ah rules and to facilitate financial and monetary transactions.

Article 165 It is permissible to exchange between the State currency and the currency of other states like the exchanging between the state’s own coinage. It is permissible for the exchange rate between two currencies to fluctuate provided the currencies are different from each other. However, such transactions must be undertaken in a hand-to-hand manner and constitute a direct transaction with no delay involved. All citizens can buy whatever currency they require from within or outside the State, and they can purchase the required currency without obtaining prior permission.