THE Sarawak government has agreed to abolish its 2.5% state sales tax imposed on tyres, Premier Abang Johari Openg said.

Revenue from the tax, which was first introduced in January 2020, is being used to defray the expenses incurred by the state to dispose of used tyres.

Sarawak once described the tyre sales tax as “the industries’ contribution towards the conservation of the environment”.

The initial rate imposed was 5%.

Tax collection was reportedly was put on hold due to strong objection from the business sector and the economic recession brought about by the Covid-19 pandemic.

The state government, however, reduced the rate to 2.5% at the end of 2021.

The reduction came after the Associated Chinese Chambers of Commerce and Industry Sarawak (ACCCIS), which has been leading the drive to have the sales tax on tyres removed, had appealed directly to the premier in 2021 for the levy to be abolished.

The lower rate did not appeal to the ACCCIS and they kept up their drive.

During the group’s Chinese New Year gathering in Kuching, Abang Johari in his address finally agreed to abolish the sales tax.

He did not provide any reason on why the state would let go of one of its sources of revenue but said Sarawak’s financial position was strong and the state is projected to be earning “substantial revenue” from two new sources – carbon trading and storage.

The premier said the projected revenue was the result of Sarawak working with a United Nations-accredited firm based in London on its carbon trading and storage venture.

He would not disclose the figure of the projected revenue.

With the state sales tax for tyres abolished, Abang Johari appealed to local businesses to think of ways to collect and dispose of discarded tyres.

He said one avenue of opportunity is in recycling the tyres. – February 11, 2023.