A surplus State Budget

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Shafie, speaking to reporters after tabling the 2020 Budget themed ‘Intensify Development For The People’s Wellbeing’.

KOTA KINABALU: Chief Minister Datuk Seri Shafie Apdal tabled a RM4.14 billion State Budget for the year 2020, with a RM48.55 million surplus.

Shafie, who is also Finance Minister, said the State Government is expected to collect RM4.19 billion in revenue for next year. This translates into a decrease of RM72.6 million (or 1.71 per cent) compared to 2019’s original estimates of RM4.26 million.

“Estimated revenue for year 2020 is classified into three main categories, namely, Tax Revenue with a total of RM1.03 billion or equivalent to 24.61 per cent; Non-Tax Revenue with a total of RM2.69 billion or 64.34 per cent; and Non-Tax Receipts with a total of RM463.3 million or 11.05 per cent,” he said.

“Petroleum royalty is expected to remain the highest contributor in the year 2020 total revenue estimates which accounts for 40.55 per cent with a projected collection of RM1.7 billion.

“This estimate is based on royalty payment received from Petronas in year 2019 amounting to RM1.703 billion which is the highest amount received in the history of Sabah,” said Shafie when tabling the 2020 Budget themed ‘Intensify Development For The People’s Wellbeing’.

Speaking at the State Legislative Assembly here yesterday, he said that the second highest contributor to the state revenue is the State Sales Tax on Crude Palm Oil (CPO) which leads in the Tax Revenue category and translates to 19.68 per cent.

However, he revealed that the price of this commodity has declined to the level of RM1,900 per metric tonne which in turn affected the State Sales Tax collection.

“Therefore, the original estimated revenue of RM900 million from this source has been revised to RM750 million in year 2019. Next year, the price of CPO is expected to reach at least RM2,200 per metric tonne with production of not less than five million metric tonnes,” he said.

Therefore, based on these projections, collection from Sales Tax on CPO is estimated at RM825 million in year 2020.

He also said that the revenue estimates for next year on State Sales Tax on lottery tickets were expected to remain the same as the 2019 estimates of RM60 million.

Shafie further explained that the State Sales Tax (Tax Rate) Order 2014, which allowed the Sabah government to impose tax on fishery commodities brought out from Sabah had already been gazetted before but the tax collection had not yet started due to the Government’s decision to study and refine the tax.

“In line with the Government’s policy to promote the agriculture industry, exemption tax will be given to aquaculture commodity, such as live fish and marine prawn. As such, it is estimated that at least RM10 million will be collected when the tax is imposed next year,” added Shafie.

Meanwhile, under the Non-Revenue Receipts category, Federal Government Receipts and Contributions are expected to contribute RM463.2 million or 11.05 per cent of the total State Budget in year 2020.

Examples of receipts in the category are Capitation Grant and Grant to Fund Operating Expenses for Departments under Concurrent List as well as Tourism Grant, which had started this year.

He also said that, over the past few years, the Sabah Ports and Harbour Department (JPDS) had achieved remarkable revenue collection.

“The original revenue estimates of RM45.4 million under JPDS has been revised to RM50.0 million in year 2019 and is expected to be maintained in year 2020. As for the Wildlife Department, it is expected to contribute RM19.5 million in year 2020,” explained Shafie.

He further disclosed that the projected revenue for the Sabah State Water Department has been set at RM305.6 million, which is equivalent to 7.29 percent of the total revenue estimates in year 2020.

In addition, the revenue collection for the Land and Survey Department is estimated at RM300 million in year 2020. This amount is equivalent to 7.16 percent of the total State Revenue Estimates.

“Whereas, the Forestry Department is estimated to contribute RM130.1 million or equivalent to 3.13 percent of the total estimated revenue in year 2020. There is a slight decrease of 12.9 percent compared to RM149.5 million last year,” he added.

According to Shafie, among the key factors contributing to the said decline are the State’s policy to ban timber exports beginning 23 May 2018, lower log production, lower returns on agroforestry royalty due to lower commodity prices such as oil palm and rubber as well as decline in the importation of timber, which is subject to inspection fees under the Fees Enactment.

He further pointed out that the estimates for Interest and Investment Returns are expected to reduce to RM264 million in year 2020 compared to the revised estimate of RM329.5 million in year 2019.

Contribution from this category represents 6.30 percent of the total State Revenue Estimates in year 2020. The reduction is due to tax credit balance from Inland Revenue Board which is coming to its full settlement.