An examination of environmental taxes from the Islamic and Shariah perspectives

The main objective of this paper is to seek an Islamic perspective on environmental taxes. The paper infers the significance (and legitimacy) of environmental taxes. A qualitative approach, based on in-depth semi-structured interviews, was selected as the research method for this study. The nine respondents in this study were selected based on their experience and basic knowledge of Fiqh Al Muamalat and its practical applications within the Islamic finance system. The Holy Qur’an, the authentic Sunnah, and the views of past and contemporary Islamic scholars on the issue of environmental taxes were also sought and utilized as part of the methodology. The findings of this study showed that the respondents held different views regarding the legitimacy of environmental taxes. One group stated that there is no legitimate impediment to the imposition of environmental taxation because it can be considered a fine or penalty for those who damage society and the environment and is therefore justifiable. In addition, if the tax is used to adopt pollution-fighting measures, it will be more Shariah-compliant, as it will be considered to be in the interest of the public good. By contrast, the second group had a different view. Although this study was not comprehensive, it is significant because it forms the genesis for future studies on the subject. This paper enhances the theoretical understanding of the tax system and environmental protection used by organizations within the Shariah framework. It adds a new discussion to the body of knowledge by examining environmental taxes from the perspective of Shariah, which is noticeably absent from the literature and a novelty in the case of both emerging and developed economies due to the lack of empirical studies on the subject. This approach is expected to enlighten the Islamic countries and encourage governments, policy makers, and society (individuals and corporations) to contribute knowledge and clarify the determinants and legitimacy of environmental taxes for prospective scholars.