Views /Opinion

Universal Basic Income (UBI): An Islamic perspective

Dr. Abdulazeem Abozaid

Interest is growing, particularly among Western commentators, in arguments that governments should distribute a universal basic income (UBI) to citizens. The practice entails providing anyone who has reached a certain age with a fixed monthly amount for the rest of their life without being asked to work in return and regardless of their financial situation. Calls for UBI became particularly intense during the COVID-19 pandemic, when some governments started to distribute periodic sums to citizens who met certain criteria.

Advocates make a powerful case for UBI, often starting with the point that meeting the basic needs of all citizens is a fundamental human right. Some highlight studies suggesting that unemployment will continue to increase as a result of technological and artificial intelligence applications taking jobs from humans. This feeds into arguments that if UBI is sufficient to survive on then it could provide individuals with the motivation and time to train for a career that genuinely interests and rewards them rather than accepting a job purely for financial reasons. It is also thought that UBI will help parents find more time to take care of their children and prepare them to become more productive citizens in the future.

History suggests that Islam is at least familiar with the principles of UBI, a point reinforced by the fact that the distribution of money to the general public has been commonplace for centuries. As sources of heritage indicate, the Islamic state used to retain various expenditures for the year and then distributed the surplus among people, although the financial resources were limited before the expansion of the conquests. Then the Islamic state expanded during the period of the Rightly Guided Caliphate and resources increased, so the nascent state became more capable of supporting people financially.

The distribution of surplus among the people was on equal basis during the time of Abu Bakr Al-Siddiq, before meeting certain criteria during the reign of Umar bin Al-Khattab, Othman bin Al-Affan, and Ali bin Abi Tali. It is also known that Umar bin al-Khattab, the second caliph in Islam, established the so-called Diwan al-Ata’, a register for recipients of the state treasury surplus, and used to distribute money annually among all people according to specific criteria. In Diwan al-Ata’, people’s names and entitlements were recorded, and no one was excluded. Money was distributed to the old and the young and every newborn, and to the free and the slave, and to the near and the far, and even to the needy among the people of the non-Muslims (Kitabis) living in the Muslim state. Differentiation was nevertheless according to the time one embraced Islam, participation in wars, proximity, and distance from the enemy, since those close to the enemy would bear the burden of protecting the frontiers.

Umar also considered the size of the wealth of each individual, as he was keen not to concentrate the wealth in the hands of a limited group of people. This consideration was in fact the primary reason why he did not divide the lands of Iraq and the Levant conquered during his reign. After the Rightly Guided Caliphate, the caliphs then began to limit giving unconditionally from Diwan al-Ata’ to the public, with money instead given to those who worked for the Islamic state, defenders of the frontiers, and deserving common people.

History therefore shows that while securing the needs of the poor and needy is a basic responsibility of the Islamic state, giving money indiscriminately is an extra favor that the state provided at early stages without being an obligation. Hence, this act falls under Shariah policy (al-Siyasa al-Shari’yya) which implies that it is subject to Maqasid considerations (realization of the public interest and avoidance of harms). This means that the government must consider both the expected harms and benefits (Maslaha) of such an act before performing it.

Significantly, Maslaha considerations can be adapted to reflect the types of controls and conditions associated with the distribution of money to citizens under UBI schemes. First, if UBI affects the state’s ability to carry out its responsibilities, for example covering defense expenditures, it should not be implemented. Likewise, if UBI affects the ability of the state to secure the basics for its poorest and vulnerable, then it is unacceptable. Neither should the state cover the cost of providing UBI by increasing taxes on workers and businesses, thereby nullifying the originally intended benefit of this act.

The state should also ensure that UBI encourages active and meaningful employment. This is particularly relevant if the amount distributed periodically is enough to discourage people from working. Additionally, Islamic states cannot distribute UBI through an obligatory zakat fund. This is because zakat has specific channels in Islam, and it is impermissible to spend it in anything other than these channels. To this end, the most important channels of zakat are for the poor and the needy, while UBI is based on spending money on people regardless of their financial positions.  This renders covering the cost of UBI in full or in part from zakat unacceptable to Shariah even if it practically results in covering the needs of the poor and needy.

Finally, Islamic law stipulates that “avoidance of harm must prevail over bringing of benefit.” Accordingly, if the state has incurred debts, then it must not spend any amount above its basic expenditures and the surplus should be spent on repaying the debt. This is to honor the creditors’ rights and to ward off the various political and economic harms that are normally caused by debts. The state should consider the retention of reserved sums of money in the treasury to cover unpredictable emergency expenses and to preserve its financial and economic position at times of need.

It is therefore clear that the concept of UBI is basically legitimate and precedented in Islam. Implementation by the state is nevertheless subject to various conditions and controls, which are ultimately meant to ensure that benefits outweigh any potential harm. This is an application of a core and fundamental principle of the Islamic legal economic theory: ‘whatever may involve benefits and potential harms should be judged based on what of the two outweigh the other’. Hence the acceptability of UBI to Islam may differ from time to time and place to place, based on the conditions surrounding its application.

Dr. Abdulazeem Abozaid is Professor of Islamic Finance at Hamad Bin Khalifa University’s (HBKU) College of Islamic Studies (CIS). The thoughts and views expressed are the authors’ own and do not necessarily reflect an official University stance.