The role of ZAKAT in Promoting Economic Growth with A Balance of "Justice"

Abstract

In Indonesia, where the majority of the population is Muslim, the potential for zakat is huge. The more zakat is spent, the more the national income of the country increases. The higher the national income of a country, the stronger its economic growth. Economic growth leads a country to prosperity and welfare. The benchmark of Zakat as a welfare regulator can indeed be used as a standard guideline in both microeconomic and macroeconomic contexts. Historical facts show that Zakat can increase a country's national income thereby creating wealth. We should emulate the government system of Umar bin Abdul Azis, especially regarding Zakat and taxation. Moreover, modern theories of Islamic economists, such as the so-called multiplier effect of Zakat, have discovered how the Zakat mechanism can actually increase national income which means increased economic growth. The provision of assistance in the form of consumer assistance alone can provide a significant multiplier effect (zakat multiplier). Moreover, since zakat is given in the form of production support such as working capital and revolving capital, its effectiveness is twice that of zakat in the form of consumer support, and the multiplier effect achieved in the economy is certainly greater. In addition, when we calculate Zakat using the macroeconomic approach to national income, we find that Zakat has a positive impact on rice income.