Lim Guan Eng highlights impracticality of Penang’s petroleum tax plan

AIR Putih MP Lim Guan Eng emphasised the impracticality of imposing a sales tax on petroleum products in Penang, should oil be discovered offshore.

The former finance minister pointed out that Penang lacks the constitutional authority to enact such a tax under the Federal Constitution.

Lim highlighted the distinct powers granted to Sabah and Sarawak under the Malaysia Agreement 1963, enabling them to implement such taxes. He noted that Penang cannot introduce new laws for tax collection independently.

“Sabah and Sarawak have special powers under the Malaysia Agreement 1963 under the Federal Constitution. Penang cannot come up with a new law (to collect taxes),” he told the Penang assembly in debating the 2024 state budget.

“Even the state legal adviser nodded in agreement when I said Penang has no constitutional rights to demand taxes from petroleum.”

Moreover, the discussion on the possibility of a sales tax arose when Penang Chief Minister Chow Kon Yeow previously suggested that Penang might consider following Sarawak’s example in introducing a sales tax on petroleum products if oil reserves are found in its waters.

Chow expressed the aspiration to emulate Sarawak’s success in generating RM4 bil in sales tax revenue.

Petronas recently announced efforts to assess the hydrocarbon potential of the Langkasuka Basin, covering the waters of Perlis, Kedah and Penang.

In June, it was reported that Petronas and its subsidiaries paid the Sarawak government RM1.2 bil in sales tax on petroleum products for the first quarter of 2023. – Nov 29, 2023


Main photo credit: Bernama

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