PENANG is set to tighten enforcement on tax defaulters and revise revenue policies after experiencing a significant cash flow crunch earlier this year, which was only resolved following a RM100 million advance from the Federal Treasury.
Chief Minister Chow Kon Yeow told the State Legislative Assembly that poor tax collection and rising public expenditure, particularly in civil service wages and welfare payouts, had put immense pressure on the state's coffers.
“We asked for the sum as a standby for a deficit that might happen or cause a cash flow problem. We were expecting a larger deficit this year of up to RM500 million, but thankfully we have reduced it to about RM100 million plus,” said Chow in response to a question from Goh Choon Aik (PH–Bukit Tambun).
Gooi Hsiao Leong (PH–Bukit Tengah) had asked whether the federal aid was sufficient. Chow assured that the amount was adequate and that any surplus could be returned to Putrajaya if not utilised.
Chow also dismissed the perception that Penang is a wealthy state, despite its high-profile investments in manufacturing and digital industries.
“Third party views, and even the federal government, think we are rich. While we are getting investors, all the money is going back to the federal side. The state only makes money from land sales and spin-offs from local businesses. All these investors are paying taxes to the federal coffers, not the state,” he clarified.
To prevent future shortfalls, the state government has outlined 24 strategies from a recent tax collection seminar. These include recovering an estimated RM6 million in unpaid quit rent, increasing hotel taxes, revising liquor licence fees, and auctioning idle government land.
Other measures under consideration include revising land use categories and fast-tracking lease conversions to stimulate property development.
Chow also revealed that the state is working with private firms to repurpose underutilised government quarters, while entertainment duties and hotel charges are being reviewed in collaboration with federal and local agencies.
“These actions are necessary to ensure a more resilient fiscal framework for Penang. We must reduce reliance on external funding and optimise internal revenue generation,” Chow said. - May 19, 2025
