Read More : http://www.nst.com.my/news/2015/10/tax-relief-disaster-insurance
I EXPECT the 2016 Budget, to be tabled in Parliament on Oct 23, will review the Personal Income Tax Reliefs and Rebates. It is hoped that the budget will be generous, especially to lower-income households, after the implementation of the Goods and Services Tax (GST), which has led to increases in the cost of living, not to mention other factors like the abolition of fuel subsidies, a weaker ringgit, which makes imports more expensive, the recent toll hikes, which pushes inflation up farther, and the unclear effects of the concluded Trans-Pacific Partnership (TPP) agreement negotiations on consumers.
On the other hand, many of us have forgotten about the impact of the major floods at the end of last year, the worst-ever in the country’s history. It was reported that in Kelantan, 2,660 houses were completely damaged in the floods. Not to mention the thousands of vehicles submerged in water that needed engine overhauls. Flooding is generally excluded from comprehensive motor insurance policies. However, car owners can insure against “Special Perils”, for example flood, typhoon, hurricane, storm, tempest, volcanic eruption, earthquake, landslide, landslip, subsidence or sinking of soil/earth or other convulsion of nature, by paying additional premiums as an extension to the standard coverage. The government should consider tax incentives for personal income, for example a “catastrophic insurance personal income tax relief”, for car owners who extend their insurance policies to reduce risk from natural disasters. In addition, such tax relief could also be considered for houseowners who purchase houseowner insurance for their private dwellings, and householder insurance to cover their household contents as well as those who cover natural disasters by purchasing an extension to their standard fire insurance policies. The catastrophic insurance personal income tax relief would encourage broad participation nationwide, and this extra premium income from the inclusion of natural disasters, which include flood cover, could spur tax revenues for the government because GST would be imposed on total premiums of all general insurance, including general takaful with syariah-compliant approaches, but excluding basic life insurance, a policy that came into effect on April 1.
In January, Prime Minister Datuk Seri Najib Razak said there was no need to rely on foreign experts for help in solving the nation’s problems, such as floods. Sometimes, the government, insurance/takaful regulators and general insurers/takaful operators need to take a divergent view of things, and considering options that have have not been thought of or done collectively. These are the long-term recommendations as far as insurance/takaful is concerned to ensure that the nation is well-equipped should floods of similar severity occur again, as well as to maximise economic returns. The proposed tax incentives could reduce the burden of federal and state governments in paying compensation to flood victims. In addition, they could also help the government ensure better management of disasters by taking into account the possibility of catastrophic floods happening again and its aftermath, so that we can ensure the people’s welfare is taken care of. n Raja Ahmad Khiruddin, Associate of the Malaysian Insurance Institute, Putrajaya
Read More : http://www.nst.com.my/news/2015/10/tax-relief-disaster-insurance