Madinat al-Muslimeen Islamic Message Board
|Economic Crisis in Egypt|
|07/25/01 at 11:15:27|
|The two stages of the sales tax and dollar bonds compound the economic crisis in Egypt|
The Egyptian government has embarked upon the implementation of the second and third stages of the sales tax (VAT), so as to include businessmen who provide services, and sell local and imported goods, whose total annual sales is about 150 thousand Egyptian pounds. It is well known that the Egyptian government used to and still imposes a sales tax on imported goods , which results in an increase their price , adding to the profit margin of the trader. However, the second and third stage of the sales tax, will mean that another 10% will be put on services and domestic and imported goods, which will be deducted from the retail merchant, or the trader who deals directly with the consumer, meaning an increase of 10% to 20% tax on all services and goods, whether they are domestic or imported.
It is strange that, in the wake of the liquidity and recession through which the Egyptian economy is going, what the Egyptian government has undertaken is contrary to the fundamentals of capitalist economics, which accept the obligation of reducing taxes in situations of recession. A reduction in taxes, they believe, would lead to more investment of capital in projects, which would help in the movement and circulation of capital in the markets. This would create some sort of marketability and have room for some of the unemployed which would, in turn, bring down the unemployment rate in the country. These are fundamental and basic principles over which there is no disagreement between the capitalist economists. However this government has exceeded the limit beyond any description by distorting the facts, falsifying issues, and challenging people’s feelings and belittling their opinions. Thus, we see the finance minister declaring that the application of the two stages will not affect the consumer and will not lead to further recession. He justified this by citing the trader’s understanding and trustworthiness; the state’s monitoring of the prices and other empty words that contain no economic or intellectual sense. It is known that applying these two stages at this moment is due to the state budget deficit, that has reached about 20 billion pounds.
Furthermore the national debt - which is the state’s loan from the social insurance bodies, pensions funds, savings accounts under the state’s control, and budget money orders - according to the central bank, had recently reached 273 billion pounds i.e. approximately 89% of the GDP. This exceeds the safe limit fixed by the capitalist economic experts, which has been set at 60% of GDP, on condition that this loan be spent on infrastructure, health and education and that the growth in the GNP (its rate does not exceed 6%) should be able to pay the instalments of this debt and its interest, so that the gap in the budget deficit does not increase to a point that it becomes difficult to be abridged, and thus the economy deteriorate.
The matter has reached such a point with this government that it has decided to give the finance minister the power to put forward treasury bonds in dollars, with a value of 2 billion dollars in the world markets and to speculate with them. The government has come out to the people bringing to them the good news of the western world’s confidence in the Egyptian economy, and the steps of its reform, through the greedy response in purchasing Egyptian dollar bonds to the value of 1.5 billion dollars. The response is such that the demand to buy these bonds has reached 3.8 billion dollars, whereas the bonds issued in the market are to the value of 1.5 billion dollars, which amounts to 500 million dollars after five years, which is paid with interest, and another billion dollars after ten years. What he did not announce to the people is the issue of such bonds and putting the central dollar reserve of the state as security (rahn). The government has also falsified this fact and did not explain to the people the real reason behind this great purchase, which is the high interest rates which will have to be born by the Egyptian economy which amount to about 6.7 % on the five year bonds, and 9.1% on the ten year bonds. This interest is enough to incite the games of the capitalist West; with its guarantee that its wealth will not be lost due to the speculation in the world markets, which it knows well and controls. This is not a testimony to the correctness of the Egyptian economy and the steps of its reform. Rather it is the greed of the Kaafir West, which is watching over the lands of the Muslims. Otherwise, where did the confidence of the Kaafir West, its testimonies and the testimonies and praise of its international institutions, go with regards to the Asian tiger economies - the states of south East Asia - and the strength of their economic system just days before their collapse.
Taxes in Islam are not, in origin, the revenue of the economy. They are not levied except in emergency situations where the state treasury (bayt ul-mal) does not have sufficient funds to spend on that which is an obligation on the Muslims, and there can be no delay, such as Jihaad and whatever relates to it, funds for emergency incidents and disasters like earthquakes, floods or funds for necessary public utilities of the Ummah like hospitals, schools and the like. The state will impose such taxes only on those who are able to pay and its amount will be determined according to the opinion of the Khaleefah of the Muslims. Such taxes will be collected from funds that exceed what is needed for meeting their basic needs of food, clothing and shelter, and also what exceeds there luxuries (extra needs) according to their normal standards of living. Moreover such a tax ends once the reason for which it was imposed comes to an end.
The State is also forbidden to speculate the wealth and the resources of the country in bonds whose valuation is tied to another currency, which exposes them to financial turbulence, just as usurious speculation is forbidden in all its forms.
As for the taxes in Egypt, they are the principle sources of revenue in the economy, the same like the man-made capitalist economies, which legislate the taxes by bands and levels of exemption according to income and responsibilities. It is not possible for anyone to play with them, or to escape from them, except the owners of capital who can afford to employ accountants or pay bribes. As for the poor employees and workers, especially those in government departments, they have no loopholes and they are the ones who bear the complete tax burden.
The one who studies this government in Egypt, and the level to which the country has descended at the hands of Mubarak and his accomplices of businessmen, will realise that this colonialist economic strategy built on the basis of privatisation, globalisation and GAT, is for the purpose of completely opening up the country to the so called investors, who are mostly from the Kaafir West or the Jews. As for the Egyptian owners of capital, they are nothing but agents and middlemen for these Western companies and the companies of the Jews. This strategy also aims l to tie the Egyptian economy with America, so that the country cannot one day become strong enough to release itself from America’s grip.
The economy in Islam is based on providing the basic needs: food, clothing and shelter to its citizens whether they are Muslims or non-Muslims one by one, and enabling the citizens to satisfy their luxuries (extra needs) at the highest level. As for the man-made capitalist economic system, it works to provide all the needs for all people and let everyone obtain what he wants as best as he is able, without differentiating between the basic needs and the luxuries, and without any regard for the humanitarian, ethical or spiritual value, all except the material value. That is why we see a country like America where there is mention of astronomical figures of national income and the income of some people, yet there are millions of people who are neglected and homeless. Furthermore the capitalist economy makes the person, whatever the level of his wealth unsafe from becoming at any moment homeless, he and his family.
The economy in Islam does not recognise poverty amongst its citizens. The Zakah section in the state treasury (Bait ul ul-Mal) is only spent on the eight categories mentioned by the Qur’aan whatever the circumstances. He (swt): ‘As-Sadaqaat (Zakah) are only for the Fuqara (poor), and al-Masakeen (poor but his condition is not known to the people) and those employed to collect (the Zakah); and for attracting the hearts of those who have been inclined (towards Islam); and to free the captives; and for those in debt; and for Allah’s Cause (for the Jihaad), and for the wayfarer (a traveller who is cut off from everything); a duty imposed by Allah. And Allah is All-Knower, All-Wise.’[9:60]
Ownership in Islam is fixed and stable, which is: ‘the permission of the Lawgiver to benefit from the asset.’ Whatever the Lawgiver has permitted for individuals to benefit from is private property. Whatever the Lawgiver has permitted for the state to benefit from is state property. Whatever the Lawgiver has permitted the public to benefit from is public property. Ownership is not thus plunder and confiscation according to the mood of the ruling regime and their accomplices in the owners of capital. Islam does not recognise privatisation or nationalisation. There is no upper limit to how much a Muslim can own of the Halaal property.
Islam does not recognise unemployment. It grants money to the one unable to pay his debts and it grants unused land, without asking for anything in return, to the one who secluded it and revived it by growing crops, planting trees or construction. It contains no taxes or what is known as insurance or social security, which places a burden on employers. It does not have people retiring on a pension at a certain age. There are no customs, which restrict the movement of foreign trade, unless as reciprocal treatment between the Khilafah state and other states. Moreover Islam looks after individual citizens who are unable to support themselves. He (saw) said: ‘Whoever left behind (after death) wealth, it is for his/her inheritors, and whoever left behind poor (dependants) they will be upon us (to look after).” Islam does not permit the safeeh (legally incompetent) to spend on the haraam, nor does it allow luxurious expenses on travel, pleasures and procession of the officials; or spending on entertainment projects in order to spread corruption, indecency and low thoughts.
Islamic economics does not recognise currency crises, because its currency relies on the cover of gold and silver. It does not depend on any other currency, such as the dollar the circulation of which in the markets America controls, and which suffers from financial crises.
Islam does not recognise crisis of recession and liquidity due to the accumulation of wealth in the hands of the rich, because the state grants the people some of her wealth in order to promote the circulation of money in the country. He (swt) says: ‘What Allah gave as a booty (fai’) to His Messenger (Muhammad [saw]) from the people of the townships, - it is for Allah, His Messenger, the kindred (of the Messenger), the orphans, al-masakeen (poor), and the wayfarer, in order that it may not become a fortune used by the rich among you.’[59:7]
In this way the economy in Islam contains tranquillity, stability and provides an atmosphere of circulation of goods and movement of the wealth of the Muslims and non-Muslims. Non-Muslims, before the Muslims, have born testimony to this, of those who lived in Egypt and other Muslims lands under the shade of the Islamic state (the Khilafah state), which implemented the Islamic economic system on its citizens.
So to the adherence to Islam, and the implementation of its rules, by establishing its state (the Khilafah State), and to work with those working to establish it, to discard the man-made kufr regimes: to this we call you, O Muslims!
To living in the tranquillity of Islam and its justice and spaciousness, and to rebel against the tyranny and oppression of capitalism which treats mankind ruthlessly. It is to this we call you, O People.
He (swt) said: ‘And if the people of the towns had believed and had the Taqwa (piety), certainly, We should have opened for them blessings from heaven and the earth, but they belied (the Messengers). So We took them (with punishment) for what they used to earn.’[7:96]
Individual posts do not necessarily reflect the views of Jannah.org, Islam, or all Muslims. All trademarks and copyrights on this page are owned by their respective owners. Comments are owned by the poster and may not be used without consent of the author.The rest © Jannah.Org