An Islamic Economic Perspective of Public Finance in Indonesia Based on Ad-Dawudi‘s Thought in Kitab Al-Amwal

Abstract

This paper analyzes Ad-Dāwudī's thought on public finance based on the source of income of a nation, its distribution, and basic ethical assumption underlying his thought. The paper also analyses the current relevance of Ad-Dāwudī's thought for Indonesia fiscal policy with a hope of potential application. This paper was based on qualitative research using literature review to analyze economic thought of Ad-Dāwudī in his Kitāb al-Amwāl. The results show that Ad-Dāwudī Devised sources of national income to recurring and non-recurring type. Furthermore, he emphasizes the role of zakah for social and economic purposes. For government spending, Ad-Dāwudī noted national defense, administrative of public duties and development as main types of spending. Ad-Dāwudī also noticed the importance of government duties to the people so that state budget should be spent in best ways to ensure welfare.