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Bismillahi Al-Rahman Al-Raheem

Only the Khilafah will rescue you from economic misery under Capitalism

On 9 June 2007, Minister of State for Finance, Omar Ayub Khan, presented the federal budget. The budget outlined both the government’s spending and its collection of revenue. There then followed days of extensive, and often heated, debate over the budget by Senators and Members of the National Assembly ahead of passing the bill.

Regrettably, throughout the debate, there was no rejection of Pakistan’s capitalist economic system that has unleashed all manner of economic misery upon the people of Pakistan. And whilst the people face rising utility prices, heavy taxes and more expensive goods, the capitalist system works efficiently to concentrate wealth in the hands of Western interests and a small local elite.

The government’s attempts disguise its economic failure were a cruel deception. As but one example, the government boasted about spending 1.8 billion Rupees ($30 million) so as to reduce the price of some food items at government Utility Stores. However, this relief amounts to a mere 2 Rupees per month per head, when divided over the 71 million of Pakistan’s poorest citizens, assuming they have the means to find a Utility Store.

And whilst the government is content in undertaking token measures for the poor, it has spent $417 million on interest on loans between July 2006 and March 2007. The lion’s share of Pakistan’s debt is to the Western colonialist dominated institutions, the IMF, World Bank and the Paris Club. Moreover, it is this debt to the West that has increased by $3.5 billion since 2002 to $32.34 billion in March 2007.

If all this were not enough injustice, the existing system ties Pakistan to the Western requirements for Pakistan’s economy, worsening the misery of the people for the sake of the Western colonialists.

Under close supervision of the IMF, the government is constantly increasing taxes upon the people. Since the financial year ending in June 2001 until now, tax collection has increased by over 80%. And the government has agreed with the Western colonialists to increase taxation target by a further 190 billion Rupees in the coming year- a sum that is over a 100 times what the government is prepared to spend to reduce the food prices in utility stores!

Excessive taxation has strangled the local economy, preventing Pakistan from rising to challenge the Western economies. Income tax eats into the people’s salaries, general sales tax makes buying essential food and medicine a burden whilst taxation on fuel and energy chokes industrial and agricultural production.

The Western interests have also overseen an aggressive privatization program, which has led to further miseries. Since 1999 until now, a total of US$ 6.1 billion has been raised from the privatization sales, a sum that is over 2,000 times what the government is prepared to spend on reducing prices in the utility stores this year!

Not only does the privatization program include public needs, such as gas and electricity, it involves raising utility prices so that the private owners can profit immensely. So, as an example the World Bank has closely overseen rises in electricity charges, which surged between 2000 & 2004 and continue to rise. So, whilst a small, local elite amasses huge wealth by owning energy resources, the rest of society is stricken by increasingly unaffordable energy prices.

Another Western colonialist policy that has increased the people’s suffering involves the loss in the value of the Rupee. The government keeps issuing currency without backing Rupee with real wealth, such as gold and silver. This inflation in the Rupee decreases its purchasing power. The weaker Rupee certainly benefits Western multinationals who can now produce goods cheaply in Pakistan and then export them to the Western economies with favorable exchange rates. However, a weaker Rupee makes buying goods more expensive and has led to the current slumps in many markets. The problem is so grave that local producers are now either leaving production altogether or focusing on meeting the needs of Western economies through exports instead.

So, through a whole host of capitalist policies, the Western colonialist with the open collaboration of the government is plunging the people into increasing economic misery. It is Pakistan’s capitalist economic system that has led to the concentration of the wealth, forsaking the entire society for the sake of a small local elite and the Western colonialists. In fact, this matter was inevitable, for wherever capitalism is implemented, a severe concentration of wealth has occurred. In Europe and America, a small fraction of the population owns most of the wealth. As such, capitalism is a system devised by man, which allows men to exploit others for the sake of their personal whims and desires.

O Muslims!

The misery that the Capitalist economic system has brought you was inevitable because it contradicts what Allah سبحانه وتعالى has revealed. Allah سبحانه وتعالى warned all of humankind,

وَمَنْ أَعْرَضَ عَنْ ذِكْرِي فَإِنَّ لَهُ مَعِيشَةً ضَنكًا
“Whoever rejects My Message (the Qur’an) for him is a life of hardship.”
[Surah Ta-Ha 20:124]

Through numerous ayat and hadith, Allah سبحانه وتعالى has given guidance on all aspects of the economy, for truly Islam is a complete code of life. The Islamic economic system alone ensures that there is circulation of wealth in the society and that wealth does not accumulate in the hands of a few. Allah سبحانه وتعالى revealed,

كَيْ لاَ يَكُونَ دُولَةً بَيْنَ الأَغْنِيَاءِ مِنْكُمْ
“Lest the wealth circulates solely among the wealthy from amongst you.”
[Surah Al-Hashr 59: 7]

So, the Islamic economic system is free of cruel taxes like GST and income tax. RasulAllah صلى الله عليه وسلم said,

لَا يَدْخُلُ الْجَنَّةَ صَاحِبُ مَكْسٍ
“The collector of taxes will not enter heaven” (Ahmad)

Instead, Islam has its own unique system of revenue collection, including revenue from public properties (such as gas) and agricultural production (such as kharaj), which generate revenue without strangling economic activity.

And the Islamic economic system assigns resources such as energy, feeding pastures and waters as public property. Neither the state nor private individuals alone can usurp its benefit for themselves, rather the benefits from it are for the entire people. RasulAllah صلى الله عليه وسلم said,

الْمُسْلِمُونَ شُرَكَاءُ فِي ثَلَاثٍ الْمَاءِ وَالْكَلَإِ وَالنَّار
“The Muslims are partners in three things, waters, feeding pastures and fire” (Ahmad)

And the currency in the Islamic state is based on gold and silver allowing the currency of the Khilafah to prevent the rise of prices that the fiat currencies of today produce.

These and other Islamic laws ensure that the Islamic economic system looks after the country’s resources in the best manner. As such the Khilafah will make it possible that the basic needs of each and every citizen are satisfied, whether they are Muslims or non-Muslims. Moreover, every person will be given the opportunity to acquire the luxuries of life without usurping the rights of other people. In a very short amount of time, under the Khilafah, Pakistan will be able to achieve its true unmet economic potential. Allah سبحانه وتعالى says,

وَابْتَغِ فِيمَا آتَاكَ اللَّهُ الدَّارَ الآخِرَةَ وَلاَ تَنسَ نَصِيبَكَ مِنَ الدُّنْيَا وَأَحْسِنْ كَمَا أَحْسَنَ اللَّهُ إِلَيْكَ وَلاَ تَبْغِ الْفَسَادَ فِي الأَرْضِ إِنَّ اللَّهَ لاَ يُحِبُّ الْمُفْسِدِينَ
“But seek the abode of the Hereafter in that which Allah has given you, and do not neglect your portion of worldly life, and be kind even as Allah has been kind to you, and seek not corruption in the earth. Verily, Allah likes not the Mufsidun (those who are mischief-makers, corrupted).”
[Al-Qasas 28: 77]

Hizb ut-Tahrir has prepared a complete outline of the Islamic economic system that is to be implemented by the Khilafah, soon, by the permission of Allah سبحانه وتعالى. We present to you at the end of this leaflet an overview of the collection of revenue and expenditure in the state.

For those whose hunger grows upon seeing the overview, we invite you to take from us further details of the Islamic economic system, which we have outlined in the books such the Economic System in Islam, the Funds in the Khilafah State and the Khilafah State Organisations.

يَا أَيُّهَا الَّذِينَ آمَنُوا اسْتَجِيبُوا لِلَّهِ وَلِلرَّسُولِ إِذَا دَعَاكُمْ لِمَا يُحْيِيكُمْ
“O you who believe! Give your response to Allah and His Messenger, when He calls you to that which gives you life.” (Surah Anfal 8:24)



Hizb ut-Tahrir


Wilayah Pakistan


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