Theoretical Analysis of Direct and Indirect Taxes ProgressivityAspect Inspired by Khums and Zakah

Economic development and fair income distribution are two significant objectives of every economy. Since tax is a very important instrument for policy making which has considerable effects on many variables such as motivational system and job selection، leisure time and as a result economic growth، Gross Domestic Product (GDP) and Ratio of consumption to GDP، income distribution، government budget and even environment; Tax system is of particular sensitivity. By reviewing Khums and zakah، this paper seeks to develop a strategy for regulating Islamic finance. The strategy’s objective is to increase economic development and fair income distribution simultaneously. As the noble prize winner indicates an instrument should be employed for realizing multiple economic objectives proportionate to each of them”. This paper is going to show that Islam devises a solution to make these two objectives realized.