It is not easy to identify the public revenue system of the Muslim state in Madinah at the time of the Prophet Muhammad (peace be upon him). Despite the marked enthusiasm of the Prophet’s companions and early followers to record every single utterance, action, or approval of an action by the Prophet, no records are known to be available on the nature, volume, types, or uses of public revenues at the time.
Obviously, there had to be public revenues, simply because there were public expenses to defray, such as the purchase of the land on which the Prophet’s mosque was built, the construction of the mosque itself and the nearby housing facility for the head of state, the Prophet; not to mention the cost of mobilizing and equipping Muslim armies, dispatching Muslim emissaries, and hosting visiting delegations.
We need, therefore, to look thoroughly into the Prophet’s traditions in order to trace the types and features of public revenues in the early Islamic state. For that purpose, we shall divide the Prophet’s era into two periods, which may be contrasted by the abundance of wealth and spoils of war resulting from the Muslim conquests in battles.
How Was the Early Muslim Community Financed in Madinah?
To understand the nature of public revenues during the first phase of the Prophet’s era in Madinah, we may need to cast a glimpse at how the early Muslim state was established in Madinah.
The advent of Islam was signaled by the beginning of the divine revelation in Makkah. Those who embraced Islam at the outset were fully prepared to sacrifice everything for the sake of their new religion. With the rising number of new believers, new needs, and hence expenses, began to appear.
Initially, there was, of course, a need for a meeting place where the band of believers could gather to learn from the Prophet. Al-Arqam Ibn Abu al-Arqam donated his house to serve both as a propagation center and a meeting place. By the same token, the Prophet made use of his wife Khadijah’s wealth, with her consent.
Subsequently, the believers were subjected to siege and a boycott, an ordeal that led only to further economic solidarity between them. Naturally, Khadijah’s wealth was subject to depletion, but the believers’ will to sacrifice was not. The Prophet’s trip to Ta’if had to be financed either by Khadijah’s money or Abu Bakr’s. There is no indication that the Prophet had yet received any other financing.
Then came the Hijrah (migration) journey to Madinah, which was fully financed by Abu Bakr, whose support for the Prophet was so pointedly acknowledged: “No one’s wealth has ever availed me like that of Abu Bakr.”[1]
Thus, the Prophet and his companions brought with them to Madinah an established “tradition” or “custom” of financing the requirements of the new religion through private contributions. There, the tradition was even more firmly established, as can be elicited from the texts of the Qur’an and Sunnah dealing with “jihad through the expending of one’s wealth.”
What Were the Main Sources of Public Support in the Prophet’s Era?
There are several references in the Sunnah to public revenues during that period. The following are the most relevant ones:
- The fraternalism established by the Prophet between the Muhajirin (incoming immigrants) and the Ansar (Madinah residents/supporters) had an obvious material aspect; that is, catering to the immigrants’ needs until they became able to take up economically productive work, rather than leaving them as a burden on the government.
- The people of Suffah were a group of immigrants instructed by the Prophet to stay near the mosque to learn from him, while also serving as his clerks and emissaries. In other words, they were full-time employees of the government. To provide for their livelihood, the Prophet called upon people to donate food and other items to them. Clusters of palm dates were often hung in the mosque for the people of Suffah to eat from.
- Shortly after his arrival in Madinah, the Prophet enacted a constitutional “blueprint” for the people of Madinah at large, be they believers, non-believers, or Jews. “The paper,” as it is called, contained a number of provisions concerning the believers’ joint responsibility to pay collectively for such imperative requirements as indemnities and blood money, ransoms for releasing Muslim prisoners of war, and assistance to insolvent debtors.
Additionally, the document stipulated that, in the case of confronting a common enemy, Muslims and Jews, as two separate communities living in Madinah, would each collectively undertake to cover their respective shares of expenditure for the benefit of the military effort.[2]
It should be pointed out that the joint responsibility of members of the same tribe to pay blood money and ransoms had always been known as a common practice since pre-Islamic Arabia. But establishing the same bond of solidarity among the state’s citizens at large, based only on the bond of the religion to which they subscribed, was something previously unknown.
- In setting about to build his mosque, the Prophet insisted on paying the price of the land that had been selected for the site. Most likely, the payment was made from the money Abu Bakr had brought with him to Madinah.[3] Khadijah had already passed away some years before the Hijrah, and it was unlikely that any of her wealth remained. Furthermore, we have no historical evidence indicating that the Prophet had brought any money with him to Madinah or received any contributions before building the mosque.
- There is no indication that the Prophet paid any salaries or compensation to public service employees at that time. He asked Abdullah Ibn Sai`d Ibn Al-As[4], who mastered reading and writing, to teach children. Nothing is reported about the Prophet compensating him for his work. Nor did the Prophet establish a system for compensating the people of Suffah, who were full-time public servants.
It may be concluded that most, if not all, public service tasks were performed by unpaid volunteers. In the event that a volunteer had to quit his bread-earning work for the sake of his public service duties, other community members willingly undertook to cover his needs.[5]
- Nothing is reported about the Prophet imposing any taxes or customs duties on anyone in Madinah, although at times he was known to have made some economic interventions. For example, he designated a marketplace for Muslims separate from that of the Jews. But there were no charges or fees for entering or using the market.
In the Sirah books, we find no mention of any financial duty other than Zakah, which was ordained in the second year after the Hijrah.
- The point that no customs duties or taxes were imposed should be juxtaposed with the prevailing poverty and dire need for help. In a recorded saying, the Prophet, struck by fits of hunger during the night, sometimes had to affix a stone or two to his stomach. The same thing is said of Abu Bakr, `Umar, and Ali. There were instances when the pinch of hunger was so acute that they could not sleep and would instead go out of their houses in the middle of the night. Some companions of the Prophet fainted; others even fell to the ground under the grip of hunger.[6]
- Despite the many texts in the Quran and Sunnah enjoining believers to give out of their money to the poor, the needy, and for jihad in support of Allah’s message, there was not a single incident in which the Prophet replaced voluntary contributions with mandatory ones, although this was the practice in neighboring kingdoms, where various types of taxes were imposed.
There is no question that the Prophet was well aware of such practices. After all, he was a well-traveled merchant who had, years earlier, managed Khadijah’s business on journeys that took him as far away as Syria.
- In the context of social welfare objectives, one saying narrated by Abu Hurairah is worth noting: “Whenever the body of a dead person was brought in for the funeral prayer, the Prophet would first ask whether the deceased had left enough to repay his debts, if any. If the answer was positive, the Prophet would go ahead and lead others in performing the funeral prayer; otherwise, he would ask the people to perform the prayer themselves. However, with the abundance of riches brought in later as a result of the wars of conquest, the Prophet said: ‘The believers belong to me more than to themselves; whoever passes away with a debt unpaid, I stand liable to repay his debt.'”[7]
In another version, he was reported as saying: “Any wealth left by the deceased should go to his kin. But if the deceased leaves only unpaid debts or young orphans, then I stand liable to take care of both.”
In another case, the Prophet agreed to lead the funeral prayer only after one man had pledged to pay off the deceased’s debt.
The government did not have sufficient revenues to assume liability for the payment of debts on which the deceased had defaulted or to serve as guardian of orphaned children. In other words, the Prophet did not permit the collection of taxes to meet those responsibilities.
- It is also noted that the state did not levy taxes for the purpose of creating employment opportunities for those who needed them. Its policy was to assist in finding such opportunities by making use of the resources of the private sector itself, instead of providing assistance directly to the needy.
This policy is illustrated by a saying narrated by Anas that a man of the Ansar came to the Prophet asking for charity. The Prophet asked: “Do you have anything in your house?”
“Yes,” said the man, “I have a piece of material, part of which we use as a cover and part of which we use as a mat; and I also have a water pot that we use for drinking.”
The Prophet asked the man to go and bring these two items, which the man did. The Prophet, exhibiting the two items, invited people to make offers to buy them. One man said: “I buy them for one dirham.”
The Prophet called several times for a higher price. Another bidder offered two dirhams and won the sale. The Prophet, giving the two dirhams to the Ansar man, instructed him, saying: “Now, go and with one dirham buy food and send it to your family; and use the other dirham to buy an adze blade and bring it to me.”
With his own hands, the Prophet fashioned a handle, fixed the blade to it, and handed it over to the man, saying: “Go and use this adze for cutting firewood, sell whatever you gather, and be sure that I do not want to see you for fifteen days.”
The man went away and did as instructed. Fifteen days later, he came to the Prophet, reporting that he had made ten dirhams, out of which he bought food for his family and a replacement piece of material.
The Prophet said to him: “This is better for you than coming on the Day of Judgment with a beggar’s mark on your face.”[8]
- The spoils and prisoners of war in the Battle of Badr (in the second year after the Hijrah) were the first significant revenues acquired by the Muslim state. Four-fifths of the spoils were distributed to the fighters; the remaining one-fifth was left for the state to utilize as it deemed appropriate for the Muslims’ interests.[9]
The Prophet made use of literate prisoners of war to educate the Muslims of Madinah, making the performance of this task a ransom for their release.
What Were the Main Characteristics of Public Finance in Early Islam?
These examples and incidents are of obvious significance. From them, we can draw several conclusions, foremost of which are the following:
- There was no public treasury (Bayt al-Mal) in the sense known to us nowadays or even in the sense known in the eras of the Caliphs and post-Caliphate periods. This may be attributed to the historical development of the Muslim state, particularly the way in which it evolved from the stage of voluntary action motivated by conviction and faith into an institutional political system.
It should not be concluded that the Prophet had no one from among his companions to serve as custodian of public funds and receive disbursement instructions. Bilal, for example, is known to have assumed that role. But most probably, the need for that role had emerged only in the second phase of the Prophet’s era.
- Direct and on-the-spot coverage of public needs was the prevailing pattern. For each project or item of expenditure, ad hoc voluntary contributions were invited. Quite often, contributions were made in labor or in kind, rather than in money.
A visiting guest, for example, was normally taken by one of the Prophet’s companions to be fed and accommodated. For the people of Suffah, clusters of palm dates were brought and hung on the mosque pillars. The mosque itself was constructed through the collective efforts of the Muslims, including the Prophet himself.
- No planning was made for future revenues, expenses, or budgets, although the Quranic chapter 12 (revealed in Makkah) points out the importance of future planning by setting aside enough provisions from surplus years to meet possible future needs in deficit years.
In some sayings, the Prophet endorsed saving enough provisions and supplies for one year’s subsistence. The reason for the absence of such planning with regard to public finance may lie in the fact that public needs at the time were rather modest, which could easily be met by depending on voluntary contributions.
This point is of particular significance, in the sense that it indicates that the state was not in the business of collecting public revenues, simply because it did not anticipate a need for sizeable expenses.
- No attempt was made to establish a public revenue system with taxation, in particular, representing a major source, although taxes were known at the time of the Prophet, as the people of Makkah were mostly engaged in trade and must have been well aware of the taxation practices in neighboring kingdoms.
Instead, the Prophet had dispraised the practice of tax collection in more than one saying. This phenomenon, i.e., the absence of a taxation-based public revenue system, cannot be attributed to historical reasons alone, as there were numerous needs that could have justified the levy of taxes, or at least the devising of other means to generate financial resources for the government.
For example, some areas of public land in Madinah might have been cultivated or leased to farmers, with the income going to the state treasury.
- Because of the lack of public revenues, the government was not able, during the initial phase, to cater to some social welfare needs, such as the repayment of debts on behalf of defaulters. Nevertheless, the state never opted to levy taxes to meet those needs, although, in theory, it could have done so.
We may note, particularly in this connection, that zakah may be disbursed to insolvent debtors. Furthermore, there were some other expenses that the state opted to suspend instead of financing them through taxation. An example of such expenses was feeding undernourished citizens, a function that is known today as guaranteeing a subsistence level of living.
- Similarly, spending on development and education was made from private-sector resources (as in the case of selling the Ansar man’s piece of material and water pot in order to buy the adze) and non-tax revenues (as in the case of prisoners of war providing basic education instead of money as ransom for their release).
There are no clear indications from which to know exactly when the incident of advising the Ansar man to gather firewood took place, but more likely, it was in the early phase of the Prophet’s era in Madinah.
- One question, though hypothetical, still remains without a definite answer: Supposing that the Prophet could not pool voluntary contributions in amounts sufficient to cover public needs, what might he have done? Would he have levied taxes? Would he have developed some other non-tax forms of revenue? Or would he have cut down public expenses, in the sense that some public needs would have been left uncovered?
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Principles of Islamic Finance: A Complete Guide
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Islamic Economics: Origins, Identity, and Independence
Islamic Banking: Theory vs. Practice
[1] This saying is reported by Ibn Majah. Sirah (Prophet’s biography) books have recorded the epic incident of Abu Bakr taking his entire savings for the Prophet’s immigration journey to Madinah, leaving nothing for the sustenance of his family back in Makkah.
[2] The text of the document is in: Zafir al-Qasimi, Government System in Shari`ah and History (Arabic), Al-Naqqash Pub., Beirut, 1974, pp. 32–36.
[3] In Sahih Al-Bukhari, it is stated that the land was owned by two young orphan boys of Madinah. Their guardian offered to give it free for the mosque, but the Prophet insisted on making the payment. See Ibn Kathir, Sirah Ar-Rasul, Vol. 2, p. 303 (Arabic), Dar Al-Fikr Pub., Beirut, 1978. It is likely that the Prophet insisted on paying for the land because the owners were still new converts to Islam, unlike Abu Bakr, whose strong faith and long standing made the Prophet feel comfortable using his money.
[4] A prominent companion who immigrated to Madinah and was martyred in the Battle of Badr. See: Ibn al-Athir, Usd al-Ghabah, Al-Sha`b ed., Cairo, 1970, Vol. 3, p. 262.
[5] This does not mean that Islam does not permit payments in return for performing such public services.
[6] There are numerous stories reported in this connection.
[7] Reported by al-Bukhari and Muslim.
[8] Reported by al-Bukhari (No. 5 under zakah), and by at-Tirmidhi, al-Nasa’i, and others.
[9] Ibn Zinjawaih (circa 251 AH), Kitab al-Amwal (Arabic), Vol. 2, published by King Faisal Center for Islamic Research and Studies, Riyadh, 1986, pp. 710–711 and 719. Also: Abu Ubaid, Kitab al-Amwal (Arabic), Al-Maktabah At-Tijariyyah Al-Kubra, Cairo, 1934, p. 306. It should be remembered that the Battle of Badr was preceded by some small expeditions. But the spoils gained from those were rather modest in quantity and might have been distributed entirely to the fighters without any share left for the state treasury. The Quranic legislation concerning the distribution of the spoils of war was revealed only after the Battle of Badr.
Reference: This series is based on a paper published by Dr. Monzer Kahf.
