Are “Sin” Taxes a Problem?

The political party, PAS, has been urging the Government to segregate revenue proceeds from gambling and alcohol from the Consolidated Fund. All revenue for the Government goes into the Consolidated Fund. And from this, the Government budgets its operating and development expenditure. Any shortfall is met by borrowings or sale (privatisation) of government assets.

Shown below is the Federal Government’s Revenue and Expenditure:

Federal Government debt (shown below) plugs the deficit and that has been growing with Covid. However, the substantial portion (96.5%) is in ringgit. That’s a saving grace!

Only 16.5% of Malaysia’s 15 million workforce pay income tax. Of this, a large portion of the Bumiputera community pay zakat and as such are exempted from income tax. This is unlike Germany where Christians pay an additional 9% religious’ tax.

So, what’s this about “sin” tax? 

We don’t have a breakdown of the sin tax. But over the years, the “sin tax” collected from both the breweries and the lottery operators run into billions of ringgits. This does not include the excise duties imposed on imported beer and hard liquor, which too would run into billions. Deputy Finance Minister II Yamani Hafez Musa told Parliament that the excise tax revenue from hard liquor is about RM1.68 billion on average every year. But that does not include the taxes paid by breweries. And with 20 percent tax paid by 4D punters, that would be several billions more. 

Malaysia is not an Islamic state. It is secular as defined by the Federal Constitution with Islam as its main religion. Many want to change that with questionable motives. Why can’t we follow Indonesia instead of Afghanistan? That will take some political courage in the present landscape. The alternative is for segregation in all its forms – because we cannot have the same blood bank, currency or community. Is that “Keluarga Malaysia”? Why can’t we celebrate diversity and “live and let live”.

References:

2022 Budget Snapshots, KPMG, 29 Oct 2021

Comment: Should sin tax be excluded from consolidated accounts? R. Nadeswaran, Malaysiakini.com, 24 Nov 2021

“Cleanse” public coffers of revenue from “sinful” proceeds, PAS Youth tells PM, G Vinod, Focus Malaysia