Plea to revise CPO tax rate due to factors
Published on: Thursday, December 09, 2021
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Kota Kinabalu: DAP’s Kota Kinabalu MP Chan Foong Hin urged the State Government to revise the rate of Crude Palm Oil (CPO) sales tax imposed on Sabahan palm oil planters.The rate is currently fixed at 7.5 per cent after a threshold of RM1,500 per tonne, he said.
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Chan made the call after taking into account three latest developments. Firstly, the State Government’s sales tax collection on petroleum products from Petronas, which was RM177.88 million in 2020 and RM1.07 billion from January to August 2021 with continued payments in the future.
He also took into account the Federal Government’s move to double the Windfall Profit Levy rate on fresh fruit bunch (FFB) production in Sabah from 1.5pc to 3pc in 2022, and thirdly, the State Government’s 2022 budget surplus of RM110.68 million.
Chan added that there is pressing concern of rising oil palm production cost, which was RM80 for one MT of Fresh Fruit Bunche (FFB) in 2008, but quadrupled to RM250-RM300 per MT presently.
“The oil palm industry is now no longer a golden crop industry. In Sabah, palm oil planters face additional challenges as compared to their counterparts in Peninsula Malaysia.
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“These include infrastructure challenges such as poor road connectivity, water and electrical issues, lack of local experts and other problems such as labour shortage.
“We must not allow this industry to be killed by the continuation of excessive taxation. What is the need for the Government keep surplus state budget if the palm oil industry continues to suffer?” he said in a statement, Tuesday.
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As such, Chan urged for the CPO Sales Tax to be standardised between Sabah and Sarawak and to lower Sabah’s tax from 7.5 per cent to five per cent like that of Sarawak’s.
“In addition, the current threshold of RM1,500 is low. I urge the Sabah Government to raise the threshold to RM2,500,” he said.
He suggested that the tax for CPO prices below RM2,500 be zero percent, while CPO prices of RM2500-RM3,500 be taxed at 2.5 per cent.
“Only if the CPO price is above RM3,500 only then the maximum of five per cent be imposed. This would certainly help with the rising cost of production and is fairer to planters who have to work hard and toil the lands with physical labour,” he reasoned.
He said with the current rate and threshold, some RM798.57 million in Crude Palm Oil (CPO) sales tax were added to Sabah’s coffers in 2019.
“With the payment of Sales Tax for Petroleum products to the Sabah government by Petronas well above this amount, there is no need for the Sabah government to worry about revenue loss.
“Since the Sabah Government can now extract more revenue from the federal government via the Petroleum sales tax, it’s time for them to be more concerned about our local Sabahan palm oil planters,” he said.
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