Wednesday, June 22, 2016

Ramadan 2016, Day 16 – Zakat

One of the Five Pillars of Islam is for a Muslim to give Zakat, essentially a religious tax. It is roughly 2.5% (one-fortieth) of your assets. Unlike taxes in most Western countries it is not based on income but how much you own. Because it would be a burden for the poor to pay this there is a minimum threshold, called a nisab, any amounts you own above the nisab is subject to Zakat. Zakat is then distributed to the poor, to pilgrims, or for other charitable purposes.

Naturally this led to many questions about how it is determined, how one should pay it etc, so there are many hadiths related to Zakat. In my Sunan Abu Dawud there are around 90 pages of hadiths discussing Zakat. Here’s some of the interesting things I’ve learned from reading those chapters:

I didn’t realize at first but many hadiths use a different word, Sadaqah, instead of Zakat. That got confusing for a while until I realized it was referring to the same thing.

If parents have children who possess wealth then it is the responsibility of the parents to either pay the Zakat on behalf of their children or make their children pay the Zakat.

Jewelry worn by ladies is subject to Zakat. There were a few Hadiths about this so it was clearly an important point. For many ladies of the time jewelry was a means of savings, it could be sold during hard times or could provide some financial security for a woman if her husband died.

There were a lot of Hadiths regarding Zakat on animals. Back in the day for many people herd animals (goats, sheep, cows, camels) were the majority of a person’s wealth. How do you value the animals? How do you provide 2.5%? Round up or down? Can you give an old, sick or injured animal as Zakat? Do pregnant animals count as double? What if you only have one or two camels? There are some hadiths, in some cases very long hadiths, that deal with these issues.

Another hadith specifically exempts horses and slaves from Zakat calculations, so you do not have to pay Zakat on that.

What about crops? The 2.5% is not universal, crops and produce have different percentages applied. Apparently it matters if the crops were irrigated by rain or a river (10% Zakat) or if the crops were irrigated artificially (5% Zakat). For fruit trees like dates there is a more complex calculation based on estimates of how much fruit you would have when the fruit is fully ripened.

Honey has a Zakat of 10%, even though back then many people did not ‘own’ the beehives and were collecting honey from the wild, so if you own stored honey you should pay Zakat on it.

As for the nisab (the minimum wealth one should have before you pay Zakat) there are many Hadiths around what the minimum should be. The Hadiths make it clear you should not be paying Zakat if doing so would just make you poor yourself. I think nowadays it is based on a certain amount of gold and how much that is worth.

More Hadiths to come over the next couple of weeks . . .

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