Sarawak to charge 5% sales tax on petroleum products from next year

KUCHING: Sarawak will impose a 5% sales tax on petroleum products starting next year as a new source of revenue to support the state's development agenda.

Chief Minister Datuk Patinggi Abang Johari Tun Openg announced the new tax when tabling a record budget of RM11.9bil in the Sarawak Legislative Assembly on Monday (Nov 5).

He said the tax, to take effect on Jan 1, 2019, will be levied on crude oil, natural gas, liquefied natural gas, chemical-based fertilisers and gas-to-liquid products, and will generate an estimated revenue of RM3.897bil.

"I would like to reiterate that the imposition of sales tax on petroleum products is our right as enshrined in the Federal Constitution.

"We will continue with our efforts to enhance and diversify the state's revenue base within the provisions of the law to enable us to accelerate development towards achieving our vision of making Sarawak a high-income state by 2030," Abang Johari said.

Sarawak is allowed to impose state sales tax under Schedule 10 of the Federal Constitution. This is currently imposed on crude palm oil, crude palm kernel oil, lottery tickets and tyres.

With the new revenue stream from the petroleum sales tax, Abang Johari said Sarawak was projected to generate a record high revenue exceeding RM10bil next year while the proposed 2019 budget would generate a surplus of RM122mil.

"A surplus budget will enable the state to continue building up its financial reserves," he said, adding that this squashed speculation that he would be using the state's RM31bil reserves to fund the budget.

From the total budget, RM9.073bil or 76% will be allocated for development expenditure, of which RM6.049bil will be provided to speed up development in rural areas.

Expressing disappointment that the 2019 Federal budget did not indicate any allocation for dilapidated schools in Sarawak, Abang Johari said the state government would allocate RM81.7mil to rebuild, repair and upgrade them, including providing water and electricity supply.

"In fact, the previous Federal Government had in its 2018 Budget approved RM1bil special allocation for the repair and upgrading of dilapidated schools.

"The new Federal Government ought to fulfil this obligation by providing the funding as approved," he said.

Abang Johari also announced a new one-off incentive of RM1,000 for every newborn Sarawakian child starting next year.

"This incentive can only be withdrawn upon attaining the age of 18 and is meant for their further education or as capital to pursue their career.

"In 2019 we shall allocate RM40mil based on the average of 40,000 babies born each year," he said.