GEORGE TOWN: Penang expects to receive about RM10mil to RM20mil more in Federal grants following improvements to revenue distribution to the states, says Chief Minister Chow Kon Yeow.
Chow, who welcomed the various grants provided by the Federal Government, said it would help states address financial issues, revenue constraints and debt burdens.
He said the state government also welcomed any additional allocations or financial incentives, including grants that had already been approved by Parliament such as the capitation grant.
Among the improvements announced were an increase in the share of tourism tax revenue returned to states from 50% to 100%, while states would also be allowed to collect entertainment duty.
“We welcome any increase in allocations or financial incentives, including those already approved by Parliament recently such as the capitation grant.
“Previously, we received 50% of the hotel tax collection, but it has now been announced that states will receive 100%.
"States are also allowed to collect entertainment duty,” he told a press conference at Seri Mutiara here on Friday (March 6).
On Thursday, the National Finance Council agreed to increase federal grants to state governments to about RM10.5bil this year from RM10.3bil in 2025, according to the Finance Ministry.
The ministry said the council also agreed to improve federal grants to states, particularly the joint list grant, the state road maintenance grant and the distribution of tourism tax.
Chow said the scope of allocations under the Malaysian Road Records Information System (Marris) had also been expanded to allow roadside drain maintenance to be carried out using the funds.
“We will study how much the state will receive, but it will not be in the tens or hundreds of millions.
"It may be about an additional RM10mil to RM20mil.
"Nevertheless, we are thankful and it will still help the state,” he said.
Chow added that there was a need to restructure the nation’s financial framework to enable the federal government and states to work more effectively together in generating development.
"The restructuring of national finances is also important so that the federal government and the states can mobilise resources together to develop the country for the well-being of the people,” he said.
