KUALA LUMPUR: Putrajaya will stick to its current mechanism of dividing tax revenue with state governments, says Deputy Finance Minister Lim Hui Ying.
Chow Kon Yeow(PH-Batu Kawan) had asked in the Dewan Rakyat if Putrajaya would amend the Federal Constitution to allow states to share tax revenue by allocating them a fixed percentage of the proceeds.
Chow, who is Penang Chief Minister, said the limited tax revenue was insufficient to manage a state.
Lim replied during Question Time on Monday (Aug 25) that the existing system must be maintained to ensure that the country’s economy remains strong.
“The government is committed to ensuring that the tax revenue is allocated to all states, including those with limited economic resources, through annual allocation and projects funded through development expenditure.
“At this juncture, we will maintain this mechanism,” she added.
Chow had also asked if the Federal Government would share tax revenue with states to support development and fund welfare and social programmes.
To this, Lim said the government has returned tax revenues collected from states through grants and annual allocations based on the approved budget.
Annual grants are disbursed directly to states according to the provisions of the Federal Constitution and relevant laws, as well as decisions by the Cabinet and the National Finance Council, she added.
Federal development projects in the education, health, security, transportation, and other sectors are another way for the government to channel tax revenue to states, she said.
This includes the Pan Borneo Highway project in Sabah and Sarawak; the Kota Baru-Kuala Krai Highway project in Kelantan; and the Gemas-Johor Baru rail project, among others.
As for Penang, Lim said RM2.5bil has been allocated to the state for this year.
She also cited the RM16.82bil Mutiara Line LRT project, the RM1.2bil Mengkuang Dam project and the RM667mil sewage treatment plant upgrade in Mak Mandin as some of the major development projects in the state.
