'Sin tax separation possible but not practical'
Aidila RazakPublished: Jan 10, 2014 8:28 AM | Updated: Jan 10, 2014 10:55 AM
It is technically possible to separate sin tax proceeds but doing so on pseudo-religious lines could be “counter-productive”, Rating Agency Malaysia chief economist Yeah Kim Leng said.
It is technically possible to separate sin tax proceeds but doing so on pseudo-religious lines could be “counter-productive”, Rating Agency Malaysia chief economist Yeah Kim Leng said.
Yeah said that while there are countries that “earmark” proceeds from sin taxes for certain purposes, this is usually done for activities that are related to the taxed industry only and not others.
For example, he said, some countries earmark portions of their tobacco tax to fund health programmes for tobacco-related diseases.
Yeah stressed that this is different from completely separating the accounts for sin tax proceeds, which although possible is not practised elsewhere.
Today, he noted, all tax proceeds will go into a consolidated account and the government allocates portions from there.
In fact, he added, the earmarking method would be more complicated for budgetary purposes, as the amounts would have to be forecasted.
“Separating accounts is not difficult. The system can cater to this to ensure no co-mingling of funds, but it may not serve the purpose for which it is intended.
“It's not productive to separate the accounts on whether a revenue is 'desirable' or 'not desirable'... and could compound the problem of a divided nation,” Yeah noted.
He was commenting on a proposal by DAP's Seremban MP Anthony Loke that sin tax revenue be separated from the consolidated account to ease Muslim concerns over non-halal revenue and to fund activities that involve mostly non-Muslims, such as vernacular education.
Ulama: Emolument should be halal
Meanwhile, Ulama Association of Malaysia secretary-general Mohd Roslan Mohd Nor said from the Islamic perspective, it is best to separate the accounts so the government can keep tabs on where the sin tax revenues go.
Roslan said this was important because such revenue can be used for certain things, and not for others.
“It can be used for public benefit, for example, to build roads or toilets, but not to build mosques. So if we don't separate it, how do we know which is used for what?” he asked.
It is also especially important to note, Roslan said, that emoluments should not come from non-halal revenue, and he pointed to the warning from Prophet Muhammad that those who get nourishment from non-halal food will distance themselves from heaven.
“So I urge governments at state and federal levels to be careful when it comes to their finances,” he stressed.
DAP's stand is reminiscent of MCA's in 2010, when the BN component party proposed that tax proceeds from legal betting be channelled into a special account for non-Muslim purposes.
The government at the time said that it would keep sin taxes in a separate account.
However, a written reply in Parliament to Loke on Oct 31, 2013, said tax revenue from special draw lotteries from January to June 2013 was used for “sports, welfare, social, cultural and health programmes to benefit society and country”.
Yeah said that while there are countries that “earmark” proceeds from sin taxes for certain purposes, this is usually done for activities that are related to the taxed industry only and not others.
For example, he said, some countries earmark portions of their tobacco tax to fund health programmes for tobacco-related diseases.
Yeah stressed that this is different from completely separating the accounts for sin tax proceeds, which although possible is not practised elsewhere.Today, he noted, all tax proceeds will go into a consolidated account and the government allocates portions from there.
In fact, he added, the earmarking method would be more complicated for budgetary purposes, as the amounts would have to be forecasted.
“Separating accounts is not difficult. The system can cater to this to ensure no co-mingling of funds, but it may not serve the purpose for which it is intended.
“It's not productive to separate the accounts on whether a revenue is 'desirable' or 'not desirable'... and could compound the problem of a divided nation,” Yeah noted.
He was commenting on a proposal by DAP's Seremban MP Anthony Loke that sin tax revenue be separated from the consolidated account to ease Muslim concerns over non-halal revenue and to fund activities that involve mostly non-Muslims, such as vernacular education.
Ulama: Emolument should be halal
Meanwhile, Ulama Association of Malaysia secretary-general Mohd Roslan Mohd Nor said from the Islamic perspective, it is best to separate the accounts so the government can keep tabs on where the sin tax revenues go.
Roslan said this was important because such revenue can be used for certain things, and not for others.
“It can be used for public benefit, for example, to build roads or toilets, but not to build mosques. So if we don't separate it, how do we know which is used for what?” he asked.
It is also especially important to note, Roslan said, that emoluments should not come from non-halal revenue, and he pointed to the warning from Prophet Muhammad that those who get nourishment from non-halal food will distance themselves from heaven.
“So I urge governments at state and federal levels to be careful when it comes to their finances,” he stressed.
DAP's stand is reminiscent of MCA's in 2010, when the BN component party proposed that tax proceeds from legal betting be channelled into a special account for non-Muslim purposes.
The government at the time said that it would keep sin taxes in a separate account.
However, a written reply in Parliament to Loke on Oct 31, 2013, said tax revenue from special draw lotteries from January to June 2013 was used for “sports, welfare, social, cultural and health programmes to benefit society and country”.
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