KUCHING, Oct 11: Constitution expert Emeritus Prof Datuk Dr Shad Saleem Faruqi should be taken with a pinch of salt as many of his opinions ignored the state’s rights enshrined in several articles in the Federal Constitution.
Lawyer Robert Lau Hui Yew clarified that Dr Shad had missed the points in Article 95B(3) of the Federal Constitution, which gives Sarawak the right to impose sales tax.
“Article 95B(3) expressly provides for the States of Sabah and Sarawak to make laws for imposing sales taxes. This article is in the main body of the Constitution and not in the Schedule. The wording is clear and unambiguous.
“Dr Shad relied entirely on the argument that the Federal List cover matters pertaining to ‘petroleum products’, hence it is out of bound for the States to legislate and impose tax on. He referred the Ninth Schedule List 1 item 8(j).
“If we read this item in the 9th Schedule, one will immediately notice that this is a generic provision listing out all items that come under the ambit of the Federal Government to make laws.
“Item 8 touches on ‘Trade, commerce and industry’ and sub item (j) covers development of mineral resources including petroleum products,” the Sarawak United Peoples’ Party (SUPP) politician said in a statement.
Lau was rebutting Dr Shad’s view during a law lecture on ‘The Spirit of Malaysia Agreement 1963 in our Constitution’ here on Oct 8, where the latter said Sarawak could only impose the state’s petroleum products come under the Federal List, and the state could only impose its sales tax to products only under the State List.
As one of the attendees of the lecturer that day, Lau said there wasn’t time during the lecture to read the Federal Constitution to offer a proper rebuttal to the view put forth that evening.
He added that the whole item 8(j) in the Ninth Schedule, the supporting stand relied on by Dr Shad, is subject to the State List item 2(c), which stated “Permits and licensed for prospecting for mines; mining leases and certificates”.
This meant that the Federal List on development of minerals and petroleum products is subject to the State List to license and regulate, where the power to legislate rests with the State and not Federal, he continued.
Lau went on explaining that this view was further supported by the wordings in article 95B(3), which went on to say “and any sales tax imposed by State law in the State of Sabah or Sarawak shall be deemed to be among the matters enumerated in the State List and not in the Federal List”.
“I wish now to draw attention to the 10th Schedule Part V of the Federal Constitution. For some reason or oversight, Dr Shad failed to highlight Items 1, 3 and 7 of the 10th Schedule Part V,” he said.
Lau said Part V assigned to Sabah and Sarawak additional sources of revenue not available to other states in Malaysia as below:
Item 1 – Import duty and excise duty on petroleum products.
Item 3 – So long as the royalty levied by the State on any mineral chargeable with export duty other than tin (but including mineral oils) does not amount to 10 per cent ad valorem.
Item 7 – State sales taxes.
“This provision in the Federal Constitution expressly assigns to the States of Sabah and Sarawak the right to levy taxes and duties on petroleum products.
“How could a generic item the Federal List override all these express and specific provisions in the main body of the Federal Constitution and the Schedules as propounded by Dr Shad?
“Article 95B(3), the proviso to item 8(j) of the federal list in the 9th Schedule of the federal list, item 2(c) in the State List of the 9th Schedule, coupled with the 3 items in the 10th Schedule, cannot be clearer to say that the State of Sarawak and Sabah have legislative authorities over Sales Tax and petroleum products and that these two Borneo States have the right to impose sales tax.
“It actually went further to give these two states the right to levy an export duty of up to 10 per cent,” he explained.
On another point that Dr Shad had raised, where the draftsmen would not have intended to give the States of Sarawak and Sabah the blanket power to impose tax otherwise it would have made the federal power to legislate on taxes meaningless, Lau deemed this as presumptuous.
He reminded that the Federal Constitution has specifically clothed the two Borneo states with the right to impose import duty, excise duty, export duty and sales tax.
The state has the right to impose these duties and taxes on resources derived from her land. This is not overstepping the federal power over taxes. — DayakDaily
