Determinants of Zakat Payment to Zakat Institution: The Case of Tunisia

Introduction

Zakat occupies a central place in the Islamic economic system. It represents the third pillar of Islam. This is one of his obligations as indicated by the Quran¹, Sunnah² and Ijmaa³. The term Zakat often comes up with different meanings: growth and increase, purity and righteousness. Zakat is the fulfillment of a right due in a property having reached Nissab⁴ and Hawl⁵. It is an act of charity according to Shariah; “Take from their goods a charity by which you purify them,” Surat Tawba, verse 103. Zakat is paid on animals, gold and silver, merchandise, cereals, fruits and Earth's products such as metals. The poor and the needy are targeted.

Zakat is a financial resource for Islamic states in addition to taxes. Given the importance of Zakat funds for the economy and society, Zakat collection and distribution institutions have been established in many Islamic states (Malaysia, Kuwait, Senegal…). Most secular governments in Muslim countries manage zakat only as a peripheral system and not as a major part of the tax system. Unlike taxation, which is an integral part of the tax system, Zakat is only treated as a voluntary system (Bakar and Rahman, 2007). Besides, the Islamic economic institutions are in the majority of wealth-creating institutions (eg Islamic banks, Islamic insurances, etc.) with little emphasis on the institution that distributes wealth such as the Zakat institutions (Abd Wahab and Abdul Rahman, 2011). Zakat could help generate a prosperous society through redistribution of income between rich and poor and an increase in the purchasing power parity of the individual (Saad et al 2014). Zakat plays a vital role in reducing poverty, unemployment and economic inequality in the society (Wali, 2013; Abdullahi, 2019). Implementation of zakat institutions is essential to increase Zakat global collection and effectively distribute the funds (Shaikh, 2015).

Since 2000, Tunisia's growth rate has been slow. The country faces difficulties in containing poverty and sharing prosperity. Despite a general reduction in the poverty rate (23.1% in 2005 vs. 15.2% in 2015)⁶, the risks for many households of falling into poverty remain high. The 40% of the population with the lowest incomes have a one in four chance of sinking into poverty. The consumption levels of many households remained just above the poverty line, making them extremely vulnerable to exogenous shocks such as job loss or rising first need product prices. Large regional disparities persist in Tunisia and have even increased in the last decade. In 2015, general poverty is 15.2%. The rates ranged from a low of 5% in Greater Tunis to a high of 30.8% in the Central West where extreme poverty is concentrated. Large spatial disparities, income gaps especially access to basic services such as education, transport or water, and sanitation persist. These differences in access to opportunities translate into unequal human development and labor market outcomes. Tunisia has one of the largest rural connectivity deficits in the MENA region: 39% rural access, compared with an average of 58% in the rest of the region⁷.

After successfully achieving a historic and remarkable democratic transition, Tunisia can now seize the unique opportunity to launch the economic and institutional reforms needed to put the country on a path to faster and more inclusive development. The Tunisian Zakat association estimates the total amount of Zakat funds for 2017 to 2000 million dinars about 10% of the state budget⁸. The implementation of a Zakat institution is a solution for the poverty and regional disparity reduction in Tunisia (Hassan and Mohd Noor, 2015). For every poor Tunisian family⁹, Zakat can provide 70 kg of olive oil per year; 73 kg of dates per year; 18 baguettes per day and 370 DT per month from Zakat bank fund. From Zakat on securities, we can provide an amount of 10 000 DT for each of 54000 unemployed persons.