State Reform Party (Star Sabah) has urged the Sabah government to claim 40 percent of the revenue collected under the goods and service tax (GST), tariffs and other sales taxes in the state.

“It is our right and there is no need to negotiate the return of 40 percent of all revenues collected from Sabah through taxes with the federal government, since this is provided for by the Malaysia Agreement and the Federal Constitution,” Star Sabah chief Jeffrey Kitingan said.

The non-return of the 40 percent of the revenue collections to the state by federal government breaches Point 11 of the Malaysia Agreement as well as Article 95B (3) of the Federal Constitution, Jeffrey said.

Point 11 of the Malaysia Agreement states: “North Borneo (Sabah) should have control of its own finance, development funds and tariffs”, while Article 95B (3) of the constitution says “The legislature of Sabah and Sarawak may also make laws for imposing sales taxes, and any sales tax imposed by state law in the States of Sabah or Sarawak shall be deemed to be among the matters enumerated in the State List and not in the Federal List.”

Jeffrey said: “Therefore, the  GST or sales tax is a state right under Article 95B(3) of the Federal Constitution, which provides that sales tax, which includes the GST, is deemed to be a matter under the State List under the 9th Schedule, and not under the Federal List. 

“In addition, under the 10th Schedule, Sabah is entitled to 40 percent of the net revenue collected.”

Sabah Customs aims to collect RM1.2 billion

Jeffrey said this when commenting on a statement made by the Sabah Customs Department director Janathan Kandok, who said last week that the department was targeting to collect RM1.2 billion in taxes under the GST, which comes into force on April 1.

The target is higher if compared with the RM768 million collected last year under the old tax system, the sales and services tax, he said in a statement issued today.

Of the RM1.2 billion targeted for collected, RM500 million would be under the GST while the balance from other taxes such as export and import taxes and the like, Janathan said when launching ‘Operasi GST 1/2015 Sabah’.

He is confident that the target can be achieved through the determination of the Sabah Customs personnel in implementing their respective tasks and the full cooperation of the taxpayers in discharging their responsibility to the country.

As at Feb 28, Janathan said, 18,625 companies out of about 20,000 Sabah companies have registered under the GST system and this far exceeded the department’s preliminary target of 10,000 companies.

Jeffrey, who is Bingkor assemblyperson, said there was now no more excuse for the Sabah government not to claim for the return of 40 percent from the RM1.2 billion GST expected to be collected in Sabah by the federal Customs Department.

“The Sabah government may not have taken me seriously last year when I highlighted that Sabah is entitled to 40 percent of the net revenue collected from the state,” he lamented, pointing out that the  Sabah government had committed a series of wrongs with regard to the imposition of GST in Sabah. 

“Firstly, the Sabah government is wrong in supporting the implementation of GST in Sabah without considering that the sales tax, including GST, are a state right, with Sabah having its own Sales Tax Enactment 1998.

“It is wrong to support the imposition of the GST without considering the rights of Sabah and the welfare of Sabahans. The state failed to seek an exemption of GST from being imposed on Sabahans by the federal government,” he added.