Sarawak to impose 5 pct sales tax on petroleum products from Jan 1, 2019

Datuk Patinggi Abang Johari Tun Openg

By Nancy Nais

KUCHING, Nov 5: To expand its revenue base by nearly RM4 billion next year, the state government has decided to impose a five per cent sales tax on petroleum products.
Chief Minister Datuk Patinggi Abang Johari Tun Openg said this would take effect on Jan 1, 2019.

The sales tax will be levied on crude oil, natural gas, liquefied natural gas, chemical-based fertilisers and gas to liquid products.

“After thorough studies on the provisions of the State and Federal Constitutions and the relevant laws, Sarawak is allowed to impose State Sales Tax,” Abang Johari said in his budget speech at the State Legislative Assembly (DUN) session today.

Under the State Sales Tax Ordinance 1998, the state imposes sales tax on crude palm oil, crude palm kernel oil, lottery tickets and tyres, and this has been a good source of state revenue.

Abang Johari said after careful consideration and analysis, the revenue expected from the imposition of sales tax on these petroleum products is estimated to be RM3.897 billion in 2019.

The higher revenue expected from this new revenue stream together with the other sources of revenue as well as alternative funding will help to support the state in its undertakings on major development programmes and projects.

“With this, Sarawak will be able to accelerate its development to be at par with that of Peninsular Malaysia and narrow the disparity gap between the urban and the rural areas.

“It will also improve the quality of life of the people, especially the rural community, and achieve the state’s vision to become a high-income state by the year 2030.”

Looking at the current reality and assessing the situation objectively, Abang Johari said Sarawak, despite 55 years of independence, was still lagging very far behind in its development as compared to that of Peninsular Malaysia.

“It is saddening indeed to see that the people of Sarawak have not been able to enjoy a good quality of life with the necessary infrastructures and amenities, particularly our rural community.

“Sarawak, therefore, has not much choice but to be self-determining in its development efforts to undertake these massive works ahead of us.

“Such efforts include putting the state’s infrastructure and basic amenities in place, be it roads and bridges, provision of water and electricity supplies, education, healthcare and many more.

“These investments are capital intensive and hinges upon our ability to secure new sources of revenue stream to fund the implementation of our development agenda.”

Therefore, in order for the state government to determine and take control of its development agenda in a more concerted and self-determining manner, they ought to resort to a more radical solution.

One of the solutions is to find ways to fund these long-awaited infrastructure projects and basic amenities.

He explained that the usual method of funding development through the annual allocation from both the state and federal budgets was not sufficient to support the development agenda.

“It is obvious that the yearly state development expenditure budget will need to be increased accordingly. This calls upon the state to look for new sources of revenue stream and at the same time tapping into available alternative funding.” — DayakDaily