Increase levy on foreign workers


In the aftermath of the 1997 economic contagion, levy was imposed on foreign workers in Malaysia.  Levy is fee imposed on foreign worker who work in Malaysia, the reality is that these levy is paid by the employer.  The levy is similar to the poll-tax which was planned for the United Kingdom in 1989.  However due to intense resistance from the people, the idea of poll tax was eventually scrapped.

In reality, this measure was to assist the Federal government coffer which was drying due to the effect of the economic contagion.  A number of initiatives was undertaken by the Federal government to cushion the effect on the capital market but most of the program did not increase Federal government liquidity instead it’s just creating paper value.  Federal government needs cash and the best way is to tax people.  As the result, the Federal government levy on foreign workers.

In 1998, the then Minister of Finance Daim Zainuddin announced in Parliament that the government collected about RM3 billion from levies.  According to him 70% of these levies actually come from Sabah.  This means that more than RM2 billion was collected from Sabah alone.

Levy, poll tax, human tax or cess is not under the purview of the Federal government.  The Federal government has no jurisdiction on this type of taxation.  The law is very clear tax such as levy is under the jurisdiction of the Local Government.  In Malaysia, the constitution protects local government as a state matter.  This means the collection of levy in Sabah should come under the jurisdiction of the Sabah Local Government Ordinance 1961.  It does not matter who collect these levies, it could be the Immigration Department or the Royal Custom and Excise Department.  The final beneficiaries should be the Local Government in Sabah.

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About gurkahsiber
I like to read, I like to think and I like to write

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