Planters crave for more cuts in cess and taxes

  • Business
  • Thursday, 22 Jan 2009

AFTER months of lobbying, oil palm planters finally convinced the Government to reduce the burdensome palm oil price stabilisation fund cess to RM2 per tonne from RM4 previously.

Despite the victory, planters, however, are still hungry for more reduction in other cess and taxes by the Malaysian Palm Oil Board (MPOB) and the Finance Ministry.

The latest on the cards are the proposals to revoke the crude palm oil (CPO) windfall tax introduced by the ministry in June 2008 when CPO was trading at its peak of above RM3,000 per tonne as well as a refund on the windfall taxes collection totalling RM300mil to RM350mil to planters.

The windfall tax issue was so pressing that Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui had to step in to arrange a meeting next month between the Finance Minister and the plantation groups nationwide, including the Malaysian Palm Oil Association, the Malaysian Estate Owners Association (MEOA) and the Sarawak Estate Owners Association.

It is hoped that the Finance Minister can provide “an immediate answer” or some consolation to the planters as the current CPO price is heading for a potential recovery of RM2,000 per tonne, the threshold price for planters to pay windfall tax.

During the current hard times, it will be good for the Government to fully abolish the windfall tax as planters are already saddled with other MPOB cess totalling about RM15 per tonne per year.

Planters are questioning why the oil palm sector has been singled out to pay the windfall tax while the equally profitable independent power producers’ windfall tax has been revoked by the Government?

MEOA president Boon Weng Siew claimed that the windfall tax collected was to not only to support the plantation sector but to also subsidise other non-related industries.

It is also unfair for the Government to tax planters based on their CPO production and not on their actual extraordinary profit gain.

For example, Sarawak’s oil palm planters, who have been in operation less than six years and have not even hit break-even point, are already slapped with state sales tax of 7.5% in addition to the windfall tax.

There is certainly no justification in overtaxing planters based on “notional” profit.

On the other hand, the planters’ request for a refund on the windfall tax collection paid to the Customs may sound a bit far-fetched.

A better solution will be for the windfall taxes collected to be used to further subsidise the high fertiliser costs of oil palm planters and smallholders.

Given the sheer size of the tax payments saddled by the oil palm planters, it will certainly be a great relief to them if the Government can revoke the windfall tax or take serious consideration of MEOA’s earlier request to raise the CPO threshold price for imposing the tax at RM2,500 to RM2,800 per tonne.

● Hanim Adnan is assistant news editor at The Star. She believes that a tax relief for everyone and not only the plantation sector should be good during current hard times.

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