Even if a state legally allows Haraam activities and does not punish them, this does not thereby mean that the state is guilty of blatant kufr, as long as it upholds the Shari’ah as the supreme source of law. It is implicitly admitting that the allowance of haraam activities is a violation, just as the Muslim who commits a sin admits that it is a sin, and this does not nullify his Islam. If the state, just as with an individual, does not acknowledge that a sin is a sin, this would constitute kufr of belief, greater kufr; and this would expel them from the religion. A Muslim may commit a sin, and imagine that he has an excuse to do so, while he is still aware that it is prohibited. Of course, this causes the individual problems, and it also causes problems for a state; acting against what we recognize to be right and correct always creates internal turmoil; but we remain Muslim nonetheless.
If the constitution of your country affirms that the Shari’ah is supposed to be the main source of legislation, it allows you to oppose those things which contradict Shari’ah on a legal basis; if it is against the Shari’ah, it is therefore unconstitutional; and this gives you grounds to oppose those things legally.
If you suspect that the government does not actually have a genuine belief in the Shari’ah, your opposition will force them to remove this clause from the constitution, at which point you will be dealing with blatant kufr, and you can act accordingly.
If you have no avenue for the redress of this type of grievance, as is the case in most of our countries, then you have the option of employing the strategy of system disruption against those institutions which dominate your government; multinational corporations and foreign investors; to commandeer their influence in support of your demands.
On a related note, do not suppose that the ayah “they take their priests and rabbis as lords instead of Allah” applies in this case simply because the state makes haraam activities legally permissible.
First of all, as mentioned, the state has acknowledged the Shari’ah as the source of law, and thus any inconsistency with the Shari’ah does not amount to a denial that a sin is a sin; secondly, the ayah refers to those who regard the legalization of what is haraam as valid; thus, if the state allows alcohol or prostitution or gambling, anyone who therefore regards those things as halaal would fall under the description in this ayah, but if they continue to regard such things as haraam, they would save themselves from the ayah.
Rasulullah ﷺ said, “Leaders will be appointed over you. You will recognize some of what they do and reject other aspects. The one who dislikes [that situation] will be innocent [of sin] . The one who objects to it will be safe [with respect to his religion] . But the one who is pleased and follows [will have his sin upon him].”
And we know that these aberrations do not amount to blatant kufr because when Rasulullah ﷺ was asked whether these rulers should be overthrown, he said: “No. Not as long as they pray.”
Imam an-Nawawi said: “The meaning is that whoever hates that evil will be free of its sin and punishment. However, this is for the one who does not have the ability to repel it by his hand or tongue. In their case, he must hate it in his heart and he will be free of sin . . . This also indicates that one who is unable to remove an evil is not sinful by • his silence. Instead, he will be sinful if he is pleased with it, if he does not dislike it with his heart or if he follows and implements it.”
And before you say that Imam an-Nawawi is implying that ‘repelling the evil by his hand if he is able’ means revolting against the ruler, you should re-read the hadith which explicitly forbids this course of action. He is automatically unable to repel it by his hand because he is prohibited from revolting against the ruler in the absence of blatant kufr, and Rasulullah ﷺ has clearly explained that a ruler who implements what does not cohere 100% with the known Shari’ah is not to be fought for that, which nullifies the argument that it constitutes blatant kufr.
So, hate and oppose whatever contradicts with the Shari’ah in every way you can that does not contradict with the Shari’ah. And, again, in my opinion, the most effective method for this opposition is to target the institutions which control the government.