Halt Sabah tax collection until revenue sharing sorted, says Yong
SAPP president Yong Teck Lee said the federal government should not delay making annual payments of at least RM2 billion to Sabah. (Facebook pic)
PETALING JAYA : Tax collection should be suspended in Sabah until the state receives its full entitlement of net shared revenue, says Yong Teck Lee, a deputy chairman of the ruling GRS coalition.
Yong, a former chief minister, said Sabah continues to miss out on its share of revenue to which it is entitled under the constitution. He said this year's RM600 million special grant from Putrajaya, though an increase from previous years, was 'a figure plucked out from nowhere'.
'We call on the federal government to honour the 40% net revenue entitlement without further delay,' Yong said in a statement.
'Until then, tax enforcement in Sabah should be re-evaluated, paused if necessary, and guided by consultation with the Sabah government and Sabah business organisations.'
Yong, who is president of the Sabah Progressive Party, also questioned Kota Kinabalu City Hall's partnership with the Inland Revenue Board (LHDN) to identify inactive taxpayers in Sabah, arguing that these were mostly petty traders and not big-time tax evaders.
He said enforcing tax compliance as petty traders battled rising costs and the people's declining purchasing power would only damage the local economy.
'DBKK should stop aligning with federal LHDN enforcement while the billions owed to this region remain unpaid. It should stop playing the role of federal tax collector to hunt down the so-called inactive tax payers.'
Yong said LHDN recently announced it had collected RM5.7 billion in taxes from Sabah last year, and hoped to collect RM6.2 billion in 2025.
He said the amount was equal to an average of RM6 billion in taxes collected in these two years, of which 40% would amount to RM2.4 billion.
'There is absolutely no reason for the federal government to delay making annual payments of at least RM2 billion to the Sabah government,' said Yong.
The revenue sharing formula has been a contentious issue for decades. Sabah politicians have called for the federal government to honour Sabah's entitlement to 40% of the amount which exceeds the net revenue derived in 1963.
Use of the formula has been suspended since 1974, with the federal government paying increased special grants to Sabah and Sarawak.
The Sabah Law Society has been granted leave to pursue a judicial review of the state's revenue entitlement, with the case to be heard on July 7.
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