B.

ECONOMIC SYSTEM AND FISCAL POLICY IN RASULULLAH ERA

Islamic economic development became an inseparable from the development of the

history of islam. Islam thinking begins since the Prophet Muhammad was chosen as Apostles.
The Prophet was given the mandate to undertake the mandate of Islamic propagation in order
to regulate the implementation of the life of mankind so that human beings live in harmony to
achieve happiness and prosperity. Muslims, especially his friend at the time by the Prophet
was educated to direct his life for the purpose of the afterlife. So the practice or activity
involving mu'amalah (economy) is also directed to the meaning of the afterlife, not solely the
intentions of the world.

Prophet Muhammad produced a number of policies regarding various matters related to

civic issues, in addition to legal issues, politics, and also the issue of Commerce or
economics. economic issues to the attention of the Prophet, because the main problem is the
economic pillars of faith that must be considered.

During his reign, the Prophet had established the basics of the laws governing human
behavior in conducting economic activity. The economic system is applied to the Prophet
rooted in the principles of qurani. At this time the Qur'an is a source of reference to the
Prophet Muhammad. Applying a number of policies that the Messenger of Allah guided by
Qur'an regarding various matters related to civic issues, in addition to legal issues (Fiqh),
politics (Siyasa), Economics (mu'amalah), ethics (akhlaq). Among the issues that concern the
Messenger is a matter of economics as it is a matter of necessity in order to organize life. in
establishing the rules governing the life of human beings in aspects of life including
economic behavior. In the field of trade, the Islamic prophet Muhammad had made a rule that
the human should be implemented, such as a ban on performing and selling that contain
elements of trickery, the prohibition of usury, and so on. As the head of State is sometimes
directly supervise the Prophet against the activities of buying and selling in the market. The
activities of buying and selling that is applied by the Prophet is a free-market system in which
prices are submitted directly to the relevant parties who do the buying and selling activities.

Behavior problems in organizing production community, the Prophet teaches some

kosher and fair transactions such as buying and selling rules, transactions, mudharabah
musyarakah, musyakkah, muzara'ah, mukhabarah, jialah, hiwalah, ariyah (loan-borrowing)
and so on. This transaction is in the law that aims to keep its mu'amalah justice and harmony
that ultimately create the glory in search of livelihood (rizkun karim).

In regulating the behavior of consumption against the results of the economy of the
community, the Prophet teaches religious obligatory, infaq, and alms to Muslims. Zakat is
obligatory on the 9th year of the Hijra, while alms given on 2nd year of hijrah. In addition to
setting the problem people are obligated to charity, also setting anyone entitled to receive it.

As for the development of thought on these periods are as follows:

1. Fiscal policy in the time of Prophet Muhammad

 At the time of the Prophet thought and mechanism of political life in a country of islam is
sourced and based on the values of aqidah.

The birth of the fiscal policy in the Islamic world is influenced by many factors, one of
them because it was part of the fiscal instrument public economics. For that factors such as
social, cultural and political. The prophet have very big challenge where he faced with the
uncertain life both from internal and external groups, in the Group's internal Messenger must
resolve the problem of how to bring together between the ansarin and muhajirin under hijrah
from Mecca to Medina. While the challenges of external groups, namely how he could
compensate for groups of from the Quraisy. But the Prophet can overcome all problems
thanks to the help of God Almighty. In the Islamic history of public finance developed along
with the development of muslim societies and the formation of the citizens of the Islamic
State by the Prophet Muhammad after moved.

2. Elements of fiscal policy during the reign of the Prophet

See the uncertain conditions like this, then the Prophet making efforts known as fiscal
policy. He as a leader in Medina by doing economic elements. Among them are the
following:

a. The Economic System

An economic system which applied the Prophet Muhammad rooted from the Qur'an
principles. The most basic Islamic principles, namely the supreme power only belongs to
Allah alone, and each man was created as a chaliph in the face of the Earth.

And here there are some principles that are the staple of the Islamic economic policy that
is described in the qur'an as follows:

1) the highest Power belongs to Allah.

2) Human beings are merely the caliph of Allah swt upfront Earth.

3) All owned and obtained by humans are the top of the grace of God Almighty,
therefore, humans less fortunate has the rights over a portion of the wealth owned
by his brother.

4) Wealth must be rotated and should not be hoarded.

5) Economic exploitation in all its forms, including riba should be removed.

6) Set the legacy system as redistribution of wealth that can be melegimitasi various
conflicts of the individual.

7) Eliminate the gap between the poor and rich.

 b. Finance and tax

In the early years since declared as the a country, Medina hardly represents a source of
income or expenditure of the State. The entire task of State making in mutual and voluntary.
The Prophet himself is a Chief of State who also doubles as Chairman of the Supreme Court,
the Grand mufti, warlord, as well as the person in charge of the administration of the State.
He does not get a salary from the State or the community, except for the small prizes are
generally in the form of foodstuffs. And at that time also there not has formal or informal of
soldier remains. Every muslim who has a physically strong and capable of fighting could be
the army. They do not have a fixed salary but was allowed to get the treasure from the spoils
of war, such as weapons, horses, camels, and other movable goods.

3. The sources of income of State

a. Based on the type

Primer revenue:

1) Ghanimah: income from the results of war.

2) Fa'i: treasure spoils obtained not by war but by the way the way dami

3) Kharaj: taxes on farmland that is charged to non-Muslims when khaibar was done
on the 7th year of the Islamic calendar, the number of fixed land of kharaj, that is
half of the yield of production.

4) Waqf, alms

5) Ushr: tithes from crops including fruits

6) Jizya: individual tax charged by the Islamic Government from people who are not
islam in return for the security themselves.

7) Kalalah inheritance: people who had no heirs

Secondary income:

1) The ransom money

2) The loan

3) Amwal fadhla: is derived from the objects of the Muslims who die without
inheritance, or originating from the goods of a Muslim person who leaves his
country and the government of a country is a body that is believed to be the
sole administrator of State and financial wealth
 4) Nawaib: is a special tax that is imposed on Muslims who are wealthy in order
to cover state expenses during an emergency, as has happened during the
Tabuk War.

5) Another charity such as qurban and kaffarat.

6) Gift.

b. based on the source

1) Muslim: zakat, zakat fitrah, ushr, waqf, amwal fadhl, nawaib, shodaqoh and
khums.

2) Non-Muslims: Jizya, kharaj, ushr (5%)

3) General: he, fa'i, ransom money, loans from muslim or non-muslim, and gifts
from Government or leader.

4. The expenditure of the State at the time of the Messenger of Allah SAW

a) Primer:

1) Financing of defence, such as camels, horses, weapons, and supplies

2) Financing salaries for caregivers, qadi, teachers, priests, repeating, and other
State officials.

3) Payment of wages to volunteers.

4) Payment of state debt

b) Secondary:

1) Help people studied religion in Medina.

2) Entertainment for the religious delegation.

3) Entertainment for the delegates of the tribe and the State as well as costs of
their travel.

4) Payment of debt to those who died in the poor state.

5) Payments to relatives of Prophet Muhammad.

 5. Baitul Mal

Baitul mal is economic institutions Islamic finance non banking which is informal. Called
informal is known since the institution was founded by Self-Help Community Group (SHCG)
different with financial institutions banking and other formal financial institutions. The
Prophet began to look at the problem of economic and financial state after he completed the
issue of political and constitutional affairs in Medina at the time of the beginning of the Hijri
year.

The first time the establishment of baitul mal as an institution is after the fall of the word
from Allah at after the badar war and that’s when companoios disputing about ghanimah :
"they (the companions) will be ask to you (Muhammad) about the anfal, say that anfal was
the property of Allah and the Apostle, then piety to God and fix the relationship among your
neighbours and be obedient to God and his Messenger if you guys really believe ". (QS. Al-
ANFAL: 1).

At the time of the Prophet Muhammad Baitul Mal located in the Nabawi mosque when it was
developed as the headquarters of the State as well as a place to Rasul live. Animals is treasure
of the State is not stored at the baitul mal but the animals are placed in the open. At the time
of the Prophet, Baitul Mal hasn’t been is a special place, that is due incoming the treasure
entering at the time it was not so much and always out of stock distributed to Muslims, as
well as used for the maintenance of state affairs. Baitul mal does not yet have specific parts
and space for archives storage and space for the author.