Division of financial resources fiscal federalism

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Division of Financial Resources: Fiscal Federalism Prof R H Hickling: “money represents power, and is at the heart of government”. FC: clear segregation of financial powers between federal and state governments – reality – balance is tilted heavily in favour of the federal government. Most of the profitable sources of income e.g. income tax, customs, excise duties, licenses for motor vehicles etc. --- Federal govt. Most of the heavy expenditure e.g. national security, the police, medicine, education, prisons, diplomatic and consular representation, pensions etc. --- Federal govt.
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On the Surface FC clearly provided for a division of legislative, executive and judicial powers between Federal and States. States are enabled to exercise some autonomy in matters specifically assigned to them.
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Reality Departure from federal model. Tremendous preponderance of power in the Federal government. Powers of the State government – exceedingly limited. Power of the Federal government extends to most of the vital areas of life. Partnership between Federal and States – unequal. Federal can encroach on State rights without much difficulty. e.g. Federal list (List 1, 9 th Schedule), item 27:
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Conclusion Malaysia is not true federation and it has moved towards a unitary structure. Malaysia may be described as “federation with a central bias”, or “quasi-federation”, or a “unitary state with some federal features”. Source: Document of Destiny: p 158 - 182
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