Abstract: This paper examines how “Zakat” provides fair
income redistribution and aids the struggle against poverty. Providing
fair income redistribution and combating poverty constitutes some of
the fundamental tasks performed by countries all over the world.
Each country seeks a solution for these problems according to their
political, economic and administrative styles through applying
various economic and financial policies. The same situation can be
handled via “zakat” association in Islam. Nowadays, we observe
different versions of “zakat” in developed countries. Applications
such as negative income tax denote merely a different form of
“zakat” that is being applied almost in the same way but under
changed names. However, the minimum values to donate under zakat
(e.g. 85 gr. gold and 40 animals) get altered and various amounts are
put into practice. It might be named as negative income tax instead of
zakat, nonetheless, these applications are based on the Holy Koran
and the hadith released 1400 years ago. Besides, considering the
savage and slavery in the world at those times, we might easily
recognize the true value of the zakat being applied for the first time
then in the Islamic system. Through zakat, governments are able to
transfer incomes to the poor as a means of enabling them achieve the
minimum standard of living required. With regards to who benefits
from the Zakat, an objective and fair criteria was used to determine
who benefits from the zakat contrary to the notion that it was based
on peoples’ own choices. Since the zakat is obligatory, the transfers
do not get forwarded directly but via the government and get
distributed, which requires vast governmental organizations. Through
the application of Zakat, reduced levels of poverty can be achieved
and also ensure the fair income redistribution.