Selangor government considering new tax system to collect funds
(The Edge) SHAH ALAM: Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim yesterday said the state government was mulling a new taxation system, similar to the zakat system, with a view to bypassing federal government control of funds.
Khalid said the state government was examining a possible scheme where income tax could be automatically deducted from wages and channelled into a trustee fund to finance state development projects.
Speaking to reporters after the state assembly sitting yesterday, Khalid said contributors to the fund could be exempted from paying income tax to the federal government, much like zakat payments for Muslims (which go to the respective state religious councils for administration).
The proposed system would also allow non-Muslims to make similar tax-exempted contributions, Khalid said, citing an example from the "Islamic age of glory" where non-Muslims made payments to the baitulmal ("Islamic treasury").
He said the state government was in consultation with legal experts and would soon seek a discussion with the state mufti on the matter.
Khalid said that although Selangor contributed about RM16 billion annually in income taxes, one of the highest in the country, the state was still not getting "meaningful" allocations from the federal government.
Khalid said he did not know how much the state was being allocated, but it was previously between RM300 million and RM500 million.
Since Pakatan Rakyat (PR) took over the state’s administration, Selangor received financial allocations via the Selangor State Development Office, which is under the purview of the federal government, he said.
This "new institution", Khalid said, replaced the previous system where funds were channelled via the state Economic Planning Unit (EPU) and district offices.
"This calls into question the level of cooperation between the state and federal governments," he said.