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Kota Kinabalu: Sabah is expected to record lower revenue from  State Sales Tax (SST) on petroleum products this year, following declining output and fluctuating global commodity prices.

Masidi said the SST collections, which exceeded RM2 billion last year, are likely to fall below that level due to a downward trend in output as it depends on the current global oil pricing,

“It will be a bit difficult for Sabah to reach RM2 billion this year, because the output of oil production is declining and has been more on the sliding trend.

“In other words, there would be less oil and gas output to be taxed, which means lower income for the State,” he said, when commenting on whether the SST collection this year would be less following the global energy crisis due to the Iran war.

Masidi said revenue from the sector is inherently volatile, as it is closely tied to global price movements and production levels.

“Income from oil and gas can go up and down depending on the global price.

“Despite the expected decline, the five per cent SST remains a crucial from of revenue that has significantly helped Sabah a lot in recent years,” he said.

Masidi added that proceeds from the tax have enabled the State Government to roll out various development initiatives and social assistance programmes, including the Syukur Aid scheme, which provides RM300 monthly financial support to low-income groups.

“While RM300 may seem small to some, it goes a long way for those in the B40 group, helping them to meet basic needs such as rice and food,” he said.

To a question, he said the SST revenue has contributed to building up the state’s reserves and funding essential infrastructure projects, particularly in improving water supply and road networks.

“A substantial portion of our revenue from the SST is spent on basic infrastructure development like improving water supply and roads, which are critical to addressing long-standing issues in the State,” he said.

Masidi added that without the additional income from SST, it would have been challenging for Sabah to meet its development needs and sustain social safety net programmes.

The State government, he said, remains appreciative of industry players such as Hibiscus Petroleum Bhd and Petroliam Nasional Bhd (Petronas), whose contributions through the tax have supported Sabah’s broader economic and social agenda.