Chief Minister Datuk Patinggi Abang Johari Tun Openg arrives at the State Legislative Assembly (DUN) Complex for the final day of the DUN sitting yesterday, during which he presented his winding-up speech. — Photo by Chimon Upon
KUCHING: Sarawakians are assured that petroleum products sold locally shall be exempted from the five per cent state sales tax.
Saying that the imposition of the sales tax on petroleum products was proposed after careful study and thorough analysis, Chief Minister Datuk Patinggi Abang Johari Tun Openg, however, said the tax would not be levied on Sarawakians as the Sarawak government did not want to add burden to their cost of living.
To the business community, he said the sales tax would have no impact on the cost of doing business in Sarawak contrary to what the Pakatan Harapan claimed.
“Let me quote an example, when the sales tax was imposed on crude palm oil and crude palm kernel oil, it did not lead to the increase in the price of cooking oil,” he said in his winding-up speech.
To the industry players in the oil and gas sector, Abang Johari — also Minister of Finance and Economic Planning — said imposition of the sales tax was the right of Sarawak that ought to be recognised.
On the concern that the imposition of the five per cent sales tax will impact Petronas financially, he said the federal government has the power to review the rate of Petroleum Income Tax on the income of Petronas and other players in the industry.
“In summary, the imposition of sales tax on petroleum products is on the same basis as that of the federal government exercising its right on the imposition of Sales and Services Tax (SST) pursuant to the Federal Constitution.
“Our effort to levy sales tax is also in the same spirit of the federal government to strengthen financial capacity.
“This is more so as Sarawak needs more revenue to enhance its financial capacity to fund all the much long-awaited and needed basic infrastructure and amenities for the well-being of our people,” he said.
Abang Johari lamented that Sarawakains had been deprived from enjoying better quality of life for more than half a century despite the fact that Sarawak is the biggest oil producing state in Malaysia.
“What an irony! Therefore, it is time for us to take control of our own destiny and boldly move on with our development agenda,” he added.
He noted that the Sarawak government’s decision to impose the sales tax was in compliance with Schedule 10, Part V, Section 7 of the Federal Constitution; hence, it is constitutionally legitimate for the state to impose State Sales Tax.
He said the State Sales Tax Ordinance 1998 allows Sarawak to impose sales tax on goods and services.
The chief minister pointed out that under the broad category of taxable petroleum products, crude petroleum tops the list as it is predominantly exported.
He said the crude oil extracted from Sarawak is of premium grade, i.e. light and sweet crude, which is for export and fetches premium price.
He noted that second in the category is natural gas, which is predominantly sold to LNG plants for processing.
“As for the other categories, namely liquefied natural gas, chemical-based fertilisers and gas-to-liquid products such as kerosene, naphtha, and wax, they are also mainly for export,” he said.