Interest on unfairly withheld taxes
19-5-2009 | IslamWeb
Question:
As-salaamu 'alaykum.
The Government is returning some of the taxes they withheld from a lot of workers over several years. They agreed that withholding the taxes from our salaries was unfair.
However, they want to repay the taxes with what they call interest.
Am I wrong in thinking that the interest the Government is paying us along with our previously held salaries is not haraam since the part of our salaries they withheld was not loaned to them in the first place, and because they are giving us the so-called interest of their own free will without our prior agreement?
Or is it (the 'interest') haraam because even though there was no prior loan agreement, it (their so-called interest) is still an extra amount of money over what they promise to return?
Please bear in mind that the Government says it can not pay back all of the illegally withheld taxes for all of the years in question to all of us (I guess because it is such a large amount) and so what they will start repaying is only a part of our salaries they illegally withheld as taxes.
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
The interest the government is going to repay along with the taxes unfairly withheld from salaries could be given either as a gift and donation or in the form of obligation:
According to the first probability, it is permissible to take it. But according to the other probability, that it is in the form of obligation under the law of the government, then it should be investigated: if the government has invested the withheld taxes, then it is permissible to take the profits if they came from permissible investments. But if they came from bank interest and the like, then it is not permissible to take it, unless one is needy. However, in case one is not needy, he may take it and spend it on the public benefit of Muslims.
On the other hand, if the government has not invested the taxes, and rather is obliged by law to repay them with interest, then that would be a usurious law. It is possible for him who is given such interest to take it and spend it on the public benefit of Muslims as we have already clarified. If he is needy, then he has the right to take from it according to his need.
Allaah Knows best.