SARAWAK has invoked a provision in the federal constitution which allows it to impose sales tax of 5% on petroleum products mined and produced in the state to fund rural initiatives, which it said was missing from Budget 2019.

The state tax, to be levied on crude oil, natural gas, liquefied natural gas, chemical-based fertilisers and gas to liquid products, will take effect on January 1, Chief Minister Abang Johari Openg said when tabling the state budget today.

“(It) is our rights as enshrined in the federal constitution (as the state) has not much choice but to be self-determining in its development efforts to undertake these massive works ahead of us,” he said.

Sarawak could also no longer rely on the federal government for development funds, he added.

With the tax, Sarawak can generate funds for the state budget of RM11.9 billion, which Abang Johari said would be heavily biased towards rural development.

Schedule 10, Part V (7) of the constitution allows the state to impose state sales tax, he told the legislative assembly.

“The usual method of funding development through the annual allocation from both the state and federal budgets is definitely not sufficient to support our development agenda.

“This calls upon the state to look for new sources of revenue stream and at the same time, tapping into available alternative funding.

“Looking at the current reality and assessing the situation objectively, Sarawak, despite 55 years of independence, is still lagging very very far behind in its development as compared to that of Peninsular Malaysia.

“It is saddening indeed to see that the people of Sarawak have not been able to enjoy good quality of life with the necessary infrastructure and amenities, particularly our rural community.

“Sarawak, therefore, has not much choice, but to be self-determining in its development efforts to undertake these massive works ahead of us.

“Such efforts include putting the state’s infrastructure and basic amenities in place, be it roads and bridges, provision of water and electricity supplies, education, healthcare and many more.

“These investments are capital intensive and hinges upon our ability to secure new sources of revenue stream to fund the implementation of our development agenda.”

Abang Johari said the state will still record a surplus budget and more importantly, it will not touch its RM30 billion reserve.

The 2019 budget is expected to generate a surplus of RM122 million on the back of revenue of RM10.513 billion and expenditure of RM10.4 billion. – November 5, 2018.