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Accepted Paper:
Does zakat payment crowd out support for wealth taxes? Evidence from Pakistan
Max Gallien
(IDS)
Vanessa van den Boogaard
(International Centre for Tax and Development)
Umair Javed
(Lahore University of Management Sciences)
Paper short abstract:
What is the relationship between zakat payment and support for state taxation? Does zakat payment crowd out support for taxation in general or for wealth taxes in particular? Does this depend on how tax policy is framed, or on religious practice? We examine these questions by focusing on Pakistan.
Paper long abstract:
Zakat, an annual mandatory payment on productive wealth and one of the five ‘pillars’ of Islam, is by some margin the largest specific informal tax on the planet, potentially rivalling total global ODA spending. While formal state funds exist, most zakat is paid directly to recipients or non-state organisations. At the same time, state taxation in many countries with zakat practices is relatively low. What is the relationship between zakat payment and support for formal state taxation? Does zakat payment crowd out support for taxation in general or for some forms of wealth taxes in particular? Does this depend on how tax policy is framed, or on the religious practice of the zakat contributor? We examine these questions by focusing on Pakistan, one of the largest Muslim-majority countries with long-standing zakat practices. We draw on a novel survey of 7,500 respondents collected in 2024.