Feasibility of Using Waqf Bonds in Financing Municipalities Projects and Examining its Welfare Effects in Comparison with Municipal Tax: A Case Study of Shiraz, Iran

In Islamic economy and Islamic societies, Waqf has been used for private provision of public goods. Waqf, will help provide proper approaches to current issues in new economy, such as production of public goods, structural adjustment, reducing budget deficit, reducing effects of congestion disposal of public policies and equitable distribution of wealth and income presented. To do Waqf, besides motivation, faith and culture, it is important that the donor or waqif can afford it. Urban public services are one of the classical municipal duties. But on the one hand, the speed of urban development and on the other hand, weak financial structure and the lack of stable income, are the causes of the growing gap between financial ability of municipalities and urban development needs. Therefore, the municipalities and local governments throughout the world should try to reform the financial structure. Waqf is one of the private ways to finance the public goods in Islamic economic. To participate in the Waqf, not only the motivation and faith, but also the power of financing are important. Recently participatory Waqf methods have been designed in which individuals may enter to Waqf with any amount of funds. This method is known as Sukuk-based Waqf or Waqf bonds. The purpose of this paper is to investigate the feasibility of using Waqf bonds to finance urban public goods. In this paper, a solution was proposed to "utilize and issue Waqf bonds by municipalities" to finance urban projects, and then the willingness to pay by individuals for municipal bills was measured. The results show that various factors affect the decision of individuals to buy Waqf bonds to assist the municipality in providing public services, including their confidence in the municipality, the usefulness of implementing Waqf bonds on financing urban projects, the duty to know the payment of municipality tolls and theamount of paying these tolls.