If they repent [of all un-Islamic beliefs], establish regular prayers and pay Zakat, leave them alone. (9:5)

    This verse explains to the idolaters of Makkah the conditions which they had to fulfil to become the Muslim citizens of the Islamic state of Madinah. If this context of the verse is kept in consideration, it follows from the words "leave them alone" that just as an Islamic State cannot tamper with the life, honour and freedom of expression of people who have acquired its citizenship after fulfilling the conditions stated in the verse, it also has no right to commit any excesses against their assets, wealth and property. If they accept Islam as their religion, establish regular prayers and are willing to pay Zakat, the Almighty bids the state to leave them alone and not demand a single penny from them once they have paid Zakat. The Prophet (sws), while explaining this directive, is reported to have said:  

I have been ordained to fight¹ with these people until they testify to the oneness of Allah and the prophethood of Muhammad, establish regular prayers and pay Zakat. If they accept these conditions, their lives shall be given protection except if they are deprived of this protection on the grounds of some offence they commit². As far as their account is concerned, it rests with Allah. (Muslim, Kitabu’l Iman)  

    In the sermon of the Last Hajj, the Prophet (sws) has rephrased this in the following subtle words:  

Indeed, your blood and your wealth are as sacred and inviolable as this day³ of yours, this month⁴ of yours in this city⁵ of yours. (Muslim, Kitabu’l Hajj)  

    It is evident from this discussion that an Islamic state has no right to impose any sort of tax on its Muslim citizens except Zakat the rates of which have been fixed in their wealth by the Almighty through His Prophets. The Prophet (sws) is reported to have said:  

After you have paid the Zakat of your wealth you have paid [all] that was required of you [by the state]. (Tirmadhi, Kitabu’l Zakat)  

There is no share in the wealth of people [for the state] except Zakat. (Ibn Majah, Kitabu’l Zakat)  

    If those in authority violate this directive, then this is a grave transgression on their part. The Prophet (sws) has warned:  

No tax-imposer shall enter Paradise. (Abu Da’ud, Kitabu’l Kharaj)  

    It is this very directive through which Islam not only ends once and for all a great tussle between a state and its citizens in financial matters, but also eliminates the possibility of a state creating imbalance in the national economy by exceeding its resources.  
    However, this does not mean that the Almighty’s requirement from the believers in financial matters also ends with the payment of Zakat. The Qur’an stresses that in this regard the actual requirement is Infaq (to spend in the way of Allah). Consequently, just as the Prophet (sws) has said that a state has no right in a person’s wealth after he has paid Zakat, he is also reported to have said:  

Indeed in the wealth [of people] there is a share [for the Almighty] after Zakat. (Tirmadhi, Kitabu’l Zakat)  

^1. No one should have any misconception from the words: `I have been ordained to fight …’ of this hadith. The opponents to here are the Bani Ismail, the nation towards whom the Prophet (sws) was directly assigned. Since the truth had been unveiled to them in its ultimate form, the law for them was to either accept faith or face destruction. Consequently, these words are specifically meant for the Bani Ismail only and have no bearing on us. 
^2. For example, execution or diyat for murder. 
^3. ie, the day of sacrifice. 
^4. ie, the month of Dhu al-Hajj. 
^5. ie, the city of Makkah.