KOTA KINABALU – Sabah is expecting a boost in revenue next year as Prime Minister Tan Sri Muhyiddin Yassin has agreed to allow the state to collect 5% sales tax from Petronas, according to Deputy Chief Minister Datuk Seri Jeffrey Kitingan.
He said the estimated collection would be around RM1.25 billion.
“The RM1.25 billion will come straight from Petronas and not included in Budget 2021. However, we may include it in our state budget.”
He added that the state government would be collecting a 5% sales tax from other oil and gas companies operating in Sabah.
However, it could not be ascertained if Jeffrey was referring to a new tax that will come on top of the annual 5% oil royalty Sabah has been getting from Petronas.
“The good news means Sabah would have more funds to spend, translating to rapid infrastructure development, human resources development, and economic development,” he said earlier tonight.
Earlier, Jeffrey described the RM5.1 billion development allocation for Sabah under Budget 2021 as disappointing and inadequate, saying such an amount gave the impression that Putrajaya is treating Sabah the way previous federal governments had always done.
The allocation is RM100 million lower from the RM5.2 billion allocated to Sabah this year.
Sabah had imposed a sales tax collection on petroleum products starting April 1 when Warisan led the state government.
Then Chief Minister Datuk Seri Mohd Shafie Apdal said all oil companies except Petronas had agreed to pay the sales tax.
He also hinted at bringing the national oil firm to court.
The 5% oil royalty has become a contentious point for Sabahans given that the state is one of the largest oil producers in the country.
During the 2018 general election, Pakatan Harapan (PH) had promised Sabah an oil royalty raise from 5% to 20%, but this did not materialise.
The then PH federal government said it would not be able to honour the election promise due to insufficient funds in the aftermath of the 1Malaysia Development Bhd (1MDB) financial scandal.
RM500 million special grant
In his statement, Jeffrey said the state government had written to the prime minister asking for RM500 million as part of a fulfilment of the federal government’s constitutional obligation.
Under Schedule 10, Article 112C of the constitution, the federal government is obliged to give Sabah 40% of net revenue derived by the federal government from the state.
Jeffrey said the RM500 million is better than the PH government’s RM53.4 million special grant for Sabah.
“The previous agreement between the Warisan-led Sabah government and the PH-led federal government was flawed.
“A paltry sum of RM53.4 million for the next four years and RM106.8 million in the fifth year means we do not have any room to renegotiate the amount for the next five years.
“This can result in huge losses in revenue for the state.
“Since the federal government had reverted to the original RM26.7 million, we can resume discussions and demand a much higher amount.
“It is our right, after all. More importantly, it gives us an opportunity to rectify the grave mistake of the Warisan government,” he said.
There was no mention of Sabah’s special grant during the tabling of the Budget 2021 yesterday. – The Vibes, November 7, 2020
