1.0 Introduction

The search for solutions to the economic problems has been a common not specific to only the Islamic but also the rest of the global society. The search for solutions paved the way for economic thinking. The society thought over financial problems in isolation, and in closed societies where the surroundings of those days influenced their thinking. Thus, the evolution of economic thoughts can be attributed to many minds and temperaments. In this line of thinking, there is a sense of common heritage that brings people closer together, and give rise to a mutual understanding of the various economic problems. Islamic society is among the ancient global societies whose ancient economic thinkers contributed significantly to its financial milestones. Islamic economics can be dated back to the Qur’an and Sunnah. Born of the twentieth century, Islamic Economics (IE) provided a new Islamic orthopraxy to help in unifying the Muslim identity across the globe, while integrating modernity with tradition. Some of these developments to date, serve an influential Islamic political agenda. Various economic thinkers conglomerated ideas, which would eventually help in solidifying the economic thoughts, and hence the Muslim identity. One of such economic thinkers was Abu Yusuf, a jurist student. The contributions of Abu Yusuf to the Muslim economic thoughts paved the way for some of the current economic successes in Muslim society.

2.0 The Theory of Public Finance

Muslim economic thinking is peculiar from the early economics by factoring in increased attention to public finance. Abu Yusuf reins among the significant contributors to the theory of public finance. Concerning the economics of taxation, Abu Yusuf made significant contributions to understanding the theory of taxation. He worked on publishing a book titled “Kitab al-Kharaj,” which appeared for the first time in the 2nd and 8th centuries (Yusof 2013, pg. 38). To date, his book remains a relevant source in the study of the theory of public finance. In this regard, Abu recognized the importance of justice in the economic development of a society. Without justice, it would be difficult to realize development. Abu Yusuf argued that eradicating justice, and rendering it to those wronged would raise tax revenue, and consequently accelerates development in a country (Azid 2010, pg. 176). When Yusuf did his work on the Kitab al-Kharaj, land taxation was at the peak where the levies inherited from the Persian rulers was “fixed land tax.”

Yusuf considered how the collected tax would be utilized to benefit the government and consequently reduce over expenditure and cuts costs of the recurrent expenditure. Every year, the government expenditures in most Islamic states are on the increase (Cassim Mahomedy 2013, pg. 565). Current data show a trend in the rise of expenses every year. A case study of Indonesia is a perfect example.

Yusuf analyzed some of the significant aspects of public finance such as the economic responsibility of the state, tax administration and its principles, equity and justice, public expenditure, utilization of idle resources, and the development of an economy. In the period that Abu Yusuf lived, the primary source of public revenue was the zakat and Kharaj (Cassim Mahomedy 2013, pg. 567). Zakat was a religious tax collected from wealthy Muslims. Kharaj was tax collected from land or land produce. In this period as mentioned before, agricultural activities were at the peak due to the availability of land. Therefore, Yusuf also focused on the utilization of land as a natural resource as earlier mentioned.

3.0 Contributions to the Theory of Taxation

The survival of any state’s economy is highly dependent on the ability of that’s state to identify the sources of revenue, and utilize the various methods of revenue collection. In fact, the main source of most government’s revenue is the tax. Abu Yusuf paved the way for the underlying economic understanding of taxation in Muslim economies (Yusof 2013, pg. 45). Methods of tax collection in the ancient times of Abu Yusuf were not at the disposal of many people. Abu Yusuf further suggested that good tax collection increases the level of investments (Ismail 2016, pg. 23). Due to low tax collections in most Muslim societies at the time, there was a huge contrast between the Islamic and commercial banking in terms of the investment activity.

The significant contributions of Abu Yusuf considered fiscal issues via the analysis of the Kharaj system. From this contribution, he did another work titled “Risalah fi-al Kharaj” (a treatise on land taxation). Yusuf fully examined the question of land taxation and the taxation of land produce (Ismail 2016, pg. 25). Considering the period he lived of the maintenance of the conquered territories, there were associated difficulties in channeling land taxes, and this was his main concern. His ideas on land taxation achieved the most adorable form of compulsory financial contribution. Some societies then made land taxation the only source of their revenue by borrowing from the ideas of Yusuf (Azid 2010, pg. 188). Consequently, the physiocrats developed a concept that the only resource, which produces the net product was land. Therefore, they recommended single land taxation as the only way to achieve a source of tax financing.

Abu Yusuf studied the whole taxation system, which was in place and understood its shortcomings. During this time in history, there were two major tax collection methods on land- the fixed tax on land and the adjusted rates according to the fertility of the land as it used to be during the Roman Empire when Caliph Umar ruled (Ismail 2016, pg. 32). In his studies, he observed that the said system was practicable at the time of Caliph Umar who adopted the fixed tax rate on land (Misahah). Abu Yusuf refused to adopt the flexible tax rates, which was dependent on the fertility of land since it caused more harm to the farmers and the taxpayers. The efforts of Abu Yusuf ensured there was a guaranteed annual income for the state treasury (Cassim Mahomedy 2013, pg. 568). The peasants would also not evade getting taxed at the pretext of lower production. During his time, there were different tax rates on the agricultural produce as tabled.

Tax base		tax rate
Quantity	Product
One Jarib	Grapes	10 dirhams
“	Dates	8 “
“	Vegetables	5 “
“	Sugarcane	6 “
“	Wheat	7 “
“	Barley	3 “

Table 1: Different tax rates of the agricultural products

All the taxes on the agricultural products were either fixed or levied in cash or some quantity of yield. There were requests from certain quarters to remove the fixed tax system from the time of al-Mansur (Cassim Mahomedy 2013, pg. 572). Caliph Harun felt the strong urge to restructure the taxation system. At this time, Abu Yusuf was working on his request and studied the whole taxation system, and identified the loopholes in the misahah system. Yusuf recognized the value of the underlying uncultivable land at the time misahah was introduced (Azid 2010, pg. 179). He also compared the cost of reviving the barren lands for the peasants and concluded that the cost would be beyond the ability of the peasants hence the involvements of the tax collecting authorities. The fixed amount of cash or the fixed measure of crops would thus disadvantage the tax-payers. He also compared the difficulties in cultivation to the decreasing trends in the prices of food grains, which would worry the tax-payers. These are some of his thoughts, which shaped the Islamic economics as far as the taxation is concerned.

3.1 Tax Administration

Abu Yusuf did not only stop at thinking of the theories of taxation and how the tax could be collected but also extended his thoughts to how the tax could be administered (Cassim Mahomedy 2013, pg. 574). Tax administration is a fundamental economic aspect of any nation, which seeks to rebuild its economic ambiance. In his study of the fiscal administration, he exhibits an insight of the practical experiences of the effects of tax administration (Azid 2010, pg. 168). According to his thoughts, the underlying factors are the delegation of authorities in tax administration as well as the protection of the collected tax. According to Yusuf, there is a need for proper surveying of the taxable property to raise the revenue collection. His thoughts are used to date in the administration of taxes collected in various sectors of the government.

4.0 Conclusion

Islamic economic (IE) thoughts were the true backbone of the modern development in economics in the Islamic states. The ancient thinkers provided a foundation for the formation of various governments, which were in charge of the available natural resources. Abu Yusuf and his thoughts laid a formidable framework for understanding the nature of the sources of revenue to the government and the management of public finances. Quite interesting is the fact that Yusuf focused on the revenue from the natural resources such as land, and today, most of the Islamic states such as Syria are leading in the innovation of such natural resources. Oil and natural gas mining have dominated most of the Islamic countries. With the economic thoughts of Abu Yusuf such as the theory of public finance and revenue collection, such governments have an economic framework for the management of such resources.

References

Azid, T., 2010. Anthology of Islamic Economics: Review of some basic issues. Review of Islamic Economics, 13(2), pp.165-194.

Cassim Mahomedy, A., 2013. Islamic economics: still in search of an identity. International Journal of Social Economics, 40(6), pp.556-578.

Ismail, N., 2016. Scrutinizing the epistemology of Islamic economics: A historical analysis. TSAQAFAH, 12(1), pp.19-46.

Yusof, M.A., Aziz, M.R.A. and Johari, F., 2013. The relationship between level of income and willingness of Muslim community to contribute for Islamic Waqf bank. In 5th Islamic Economic System Conference (iECONS 2013), Berjaya Times Square Hotel, Kuala Lumpur on 4th-5th September. Pp. 36-89.

Islamic Economic Thought