Standing firm over Sarawak’s right

Posted on : 04 Jan 2019  Source of News: The Borneo Post

Sarawak shifts onus to federal government to cope with 5 per cent petroleum products sales tax

Abang Johari shows reporters his press statement after the press conference yesterday. — Photo by Chimon Upon

KUCHING: Sarawak has no plan to withdraw the five per cent sales tax imposed on petroleum products despite dissent from Putrajaya.

Chief Minister Datuk Patinggi Abang Johari Tun Openg said Finance Minister Lim Guan Eng had expressed his view during the Dec 17 meeting that the sales tax “is not fair (adalah tidak wajar)”.

The federal government Special Cabinet Committee on Malaysia Agreement 1963 (MA63) convened for the first time in Kuala Lumpur on Dec 17 last year.

“He (Lim) was saying that it may increase the cost, investors may not want to invest in oil and gas in Malaysia because of the sales tax.

“Then my reply was – that is our right to impose sales tax under the (Federal) Constitution. If it is not competitive, then the federal government can recalibrate the tax structure because they also impose petroleum income tax which is 38 per cent.

“They can reduce that (38 per cent) in order to be competitive, why should we sacrifice ourselves because that is the right of Sarawak. We agree that it is our right, we can impose the five per cent (sales) tax,” Abang Johari said at a press conference here yesterday.

He made these remarks after chairing a meeting with the state Consultative Committee on MA63 at the State Legislative Assembly Complex in Petra Jaya.

The Chief Minister repeated “he (Lim) kept quiet” twice when asked whether the federal government agreed with the argument.

Reiterating that “that is our right”, Abang Johari said: “Under the (Federal) Constitution, there is no capping.”
He pointed out that the Sarawak government could even imposea 10 per cent sales tax on petroleum products if it wanted to.

“But we also consider the economic environment, so we impose only five per cent. What they (Putrajaya) can do is reduce five per cent, 38 minus five and 33 (per cent) enough lah.”

According to him, the federal government is presently imposing a 38 per cent on petroleum income tax, stipulated under the Petroleum Income Tax Act (Pita) 1967.

When asked why such a high percentage on petroleum income tax, Abang Johari said: “You ask them (Putrajaya) lah. I cannot reply lah.” The chief minister said Sarawak has the right to impose the five per cent sales tax under Article 95C and Ninth Schedule of the Federal Constitution.

On top of this, he said Economic Affairs Minister Datuk Seri Mohamed Azmin Ali, during the Dec 17 meeting, had supported the idea of Petroliam Nasional Berhad (Petronas) and Sarawak government carrying on the discussion on petroleum-related matters.

Abang Johari explained: “There has been a formula between Petronas and our side (Sarawak government) with regard to our OMO (Oil Mining Ordinance), because we want to participate in the upstream as well as downstream.”

“So this is an ongoing discussion but apparently Petronas is sort of, I don’t know the word, caution lah. But we want it to be continued and Azmin says he will ask Petronas to continue the discussion. It is a commercial arrangement,” he added.