Langkawi tax autonomy risks creating problematic precedent, warns economist

Economist Carmelo Ferlito has cautioned against providing tax autonomy exclusively to Langkawi, warning that such a move could set a dangerous precedent for the nation's governance structure.

Ferlito argued that offering tax powers to a single state would likely prompt other Malaysian states to seek comparable arrangements, potentially undermining the coherence of the country's economic and fiscal systems.

"If only Langkawi receives this autonomy, other states will inevitably make similar demands," Ferlito said, highlighting concerns that piecemeal policy-making could prove counterproductive.

The economist cautioned that allowing different states to operate under varying tax regimes could transform Malaysia into "a patchwork of exceptions," complicating interstate commerce and creating administrative challenges.

The warning comes amid discussions about granting Langkawi enhanced fiscal powers, a proposal that economic observers say requires careful consideration of broader implications for the nation's integrated economic framework.