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Islamic fiscal policy (H2)<br />The application of the principles of the Koran, particularly the avoidance of usury, to the financing of a government's expenditure. Islamic governments aim to balance their budgets to avoid borrowing; if borrowing is needed, government securities can be issued at less than their redemption value as a means of disguising an interest payment. Also, there are severe problems in raising revenue as purchase tax exploits the needy and incomes are too low to have a broad-based income tax. Even the special tax under Islamic law, the 'zakat', which is an annual wealth tax, can only be used to finance social purposes, mainly at the local level.
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abortive benefits (H2)<br />Social benefits which fail to achieve their purpose. There is no net increase in a recipient's income as the benefits are outweighed by income taxation. Proposals for a NEGATIVE rNCOME TAX, which would merge benefits and taxation into a single system, attempt to ensure that benefits raise net mcome.
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