Social Tax and Transfers for Poverty Alleviation: A Case for Low and Middle Income Countries

The world has made notable progress in achieving the Millennium Development Goal (MDG) of halving the rate of extreme poverty (from 43 per cent in 1990 to about 17 per cent in 2011) before 2015. Nevertheless, about 1 billion people are still under the poverty line. Despite the progress at the global level, poverty prevails with different intensity in different parts of the world. Abject poverty and extreme deprivation are still present and any programme to reduce them requires a transfer of resources from the rich to the poor. Sustaining such transfers requires viewing them as a moral imperative on the rich, as emphasized by most religions. This chapter rekindles such view and highlights its practical potential based on Islamic rules about zakat, which are a culmination of earlier Divinely inspired teachings.