All, except S’gor and Penang, receive more than they pay in tax
KUALA LUMPUR: Federal spending exceeded revenue contributions in almost all states between 2023 and 2025, with only Selangor and Penang recording higher contributions than allocations, reveals the Prime Minister.
Datuk Seri Anwar Ibrahim said the situation was different with both states due to their strategic economic positions.
Official figures, he said, refuted claims that certain states were being sidelined, maintaining that every state received higher allocations under his administration despite differences in tax contributions.
“And in most cases, the allocations exceeded the average tax revenue collected, with the exception of Selangor and Penang which generate significantly higher tax revenues while federal expenditure in both states are comparatively lower.
“For example, the average tax revenue from Selangor between 2023 and 2025 amounted to RM43.6bil, while federal expenditure in the state over the same period totalled RM15bil.
“For Penang, the Federal Government collected an average tax revenue of RM10.7bil, with expenditure at RM7.9bil. This clearly contradicts claims that Penang has received disproportionately higher allocations,” he told Parliament yesterday.
Over the same period, Anwar said Kelantan generated an average RM946mil in tax revenue, with federal expenditure there at RM8.9bil. For Kedah, average tax revenue stood at RM3.7bil,with RM9.5bil in federal spending.
“In Terengganu, tax revenue totalled RM1.2bil, but rose to between RM2.2bil and RM2.4bil after taking into account petroleum revenue. Even so, federal expenditure there reached RM7.8bil over the same period.
“Perlis contributed RM419mil in tax revenue but received RM2.2bil in federal spending. Johor generated about RM14bil in tax revenue against RM16bil in federal expenditure,” he further disclosed.
Anwar explained that the Federal Government maintained an increased allocation for every state due to urgent needs such as poverty eradication programmes, upgrading school facilities and infrastructure, and improving public amenities.
He also said the government increased allocations to the states through initiatives such as the Ecological Fiscal Transfer and higher capitation grants.
“It is entirely untrue to claim that certain states have been neglected or marginalised. If comparisons are to be made, let me stress that it is under the Madani government that states such as Kedah, Terengganu and Kelantan have received their highest-ever allocations compared with previous administrations,” he said.
Meanwhile, Anwar said Sarawak’s interim special grant might be increased under ongoing Malaysia Agreement 1963 (MA63) fiscal negotiations, following the rise in Sabah’s interim allocation.
He assured that negotiations would continue, saying it was only appropriate that an increase be considered in the spirit of the MA63.
“This will be approved as soon as possible, and discussions have already taken place between the Treasury secretary-general and Sarawak State Secretary.
“In the most recent negotiations with Sarawak Premier (Tan Sri Abang Johari Tun Openg), no announcement on an increase to the special grant was made, as the (Sarawak) government wanted to focus on the RM1.8bil payment made to the Federal Government,” he said in response to Sri Aman MP Datuk Seri Boris Sophia Brodi on whether Putrajaya intended to raise the special grant rate for Sarawak.
Anwar said the interim rate for Sabah was high based on the understanding under the MA63 and after rounds of negotiations with state leaders.
The Prime Minister had previously announced the increase of the interim rate for Sabah to RM1.5bil from RM600mil, pending the finalisation of the implementation mechanism for the state’s 40% revenue entitlement under MA63.
