Academic calls for independent grants commission to channel aid to states

IDEAS fellow Tricia Yeoh says states should be allowed to collect consumption tax, as had been done in some countries, to increase their revenue.

KUALA LUMPUR: An independent grants commission must be set up to determine how funds are channelled to state governments, Institute for Democracy and Economic Affairs (IDEAS) fellow Tricia Yeoh said today.

Yeoh said this commission could come up with specific formulas, based on components such as economic growth or population, to determine how funds are going to be given to the states.

“There is also a need to think of new creative solutions, such as states being allowed to collect consumption tax. This has been done in some countries.

“There are arguments for and against this, but we should at least have a debate on how the states can be better funded,” she said at the “New Malaysia, Old Politics” forum held at Universiti Malaya today.

Also present were DAP supremo Lim Kit Siang, political economist Terence Gomez, and economist KS Jomo.

Yeoh said one institutional reform the federal government should consider was to revise the whole revenue-sharing arrangements with all of the states.

She pointed to a problem of states being too dependent on the federal government, the problem of states cutting down trees to earn revenue from logging and making sure they have revenue for themselves.

Yeoh cautioned that if states had no steady revenue stream from the federal government, or at least an institutionalised and independent mechanism by which the revenue is channelled downwards, states will take matters into their own hands, as has been done in the past.

“Opposition states, or even smaller Pakatan Harapan states, may resort to measures that can harm the environment. This will affect the rest of us as citizens of the country.

“The main point here is that Barisan Nasional did politicise channelling of funds to opposition states in the past. My call is for that not to happen again under this new government.

“PH has a great opportunity to live up to its democratic ideals and not repeat the things they have criticised in the past — to show that they are the bigger man. They should do better than BN ever was,” she said.

Yeoh said it was still too soon to tell if PH would follow in the footsteps of BN.

Opposition MPs getting less allocations

Yeoh said there appeared to be some semblance of that happening at the moment, where opposition MPs are getting less allocations (RM100,000) for their parliamentary constituencies when compared to their PH counterparts, who will be getting RM500,000.

Yeoh also cited the issue of some opposition members not being allowed to go into schools. In Johor, opposition members cannot attend state functions.

“All these are a reminder of what PH went through since 2008.

“Is the federal government going to maintain such a culture, or will they practise what they preach, espousing democratic leadership qualities?”

Yeoh said the present situation of Umno running opposition states such as Perlis and Pahang, and PAS governing Kelantan and Terengganu was something new altogether.

Umno, which had never lost power before, never had to care much about where their finances would come from, she said.

“For instance, Pahang incurred a RM3.2 billion debt. That is a huge amount.”

She said Pahang’s accumulated debts were a result of uncollected taxes and low-cost housing rent since the 1970s.

“My point is that this was never a concern or worry before. Perhaps the federal government then had closed one eye and continued to channel funds to the state.

“However, in this new scenario (post-GE14), states will actually have to come up with new strategies to deal with money issues,” Yeoh said.