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Federal, State leaders not on same page?
Published on: Sunday, January 28, 2024
By: Datuk Johan Arriffin
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Masidi (left) had to clarify the 40pc tax return issue to Ewon through the media. One is State Minister and the other Federal
In July 2023, United Progressive Kinabalu Organisation (Upko) President Datuk Ewon Benedick said Sabah Pakatan Harapan (PH), of which Upko is a member, will proceed with legal action over the 40pc tax claim.
A few months later, Sabah Pakatan Harapan gostan (reversed) its earlier statement announcing its withdrawal of the suit against the Federal Government. The withdrawal drew flak across the political divide with some suggesting something fishy going on.
Some said the State leaders had again succumbed to Federal Government pressures.
At the Upko National Convention, Ewon said:
“The Federal Government has agreed to finalise the implementation of the 40pc federal revenue allocation formula by July this year and this is made possible through the MA63 technical committee implementation council.”
People are wondering why it took so long to come out with a formula. Best to hire an independent accounting firm to assess the money owed to Sabah to save all the headache. No need for formula, it’s straight 40pc of all tax collected from Sabah.
With PH withdrawal of its legal challenge on the 40pc share of tax revenue, the Sabah Law Society (SLS) seems the sole litigant to fight for Sabah rights in the court of law.
Its former president Roger Chin said the review order published on April 20, 2022, which revoked the Sabah Special Grant (first review) Order 1970, was a serious breach of constitutional duty.
SLS deems this action by Federal Government as a serious breach of its constitutional duty, which has had significant legal consequences. I would like to add, huge monetary implications, too.
Chin said the people of Sabah had suffered the consequences of this breach for a prolonged period from 1974 to 2021, amounting to 48 years of denied entitlement.
He said the duty to pay Sabah’s 40pc net revenue special grant entitlement was crucial in bridging the economic gap and ensuring the progress and well-being of the people in this state.
Sabah’s 40pc entitlement, which was due to be paid immediately after the formation of the Federation of Malaysia on 16 September 1963, was a fundamental right granted under the Malaysia Agreement 1963 (MA63), he added.
After 60 years as partners of Malaysia, Sabah has the highest poverty rate in the country. Money has been siphoned from its oil wealth to other regions in Malaysia.
It was announced by a federal minister in parliament, Petronas has paid cash payments (oil Royalties) from 2008 to August 2020 (over a 12-year period) totalling RM38.5 - RM25.3 billion for Sarawak and RM13.2 billion for Sabah.
Sabah and Sarawak are the richest oil producing states in Malaysia. In one year alone (2023), Petronas paid RM40 billion ringgit to the Federal Government.
There is a strong perception that over the years the Federal Government has taken out more (through tax and petroleum dividends) from Sabah than it gives out.
In a developing story reported, Ewon said the Sabah Government must register an official demand for the 40 per cent revenue sharing with the Federal Government.
This is because he believed, the State Government has never made an official demand to the Federal Government for the payment of revenue owed to Sabah. Sabah has been playing a waiting game all this while said Ewon.
Playing the waiting game all this while? 60 years as partners of Malaysia, and we are still playing waiting games? Let’s get back to some serious talk.
Masidi responding to Ewon’s statement on the letter said Sabah can only give a formal letter of claim to the Federal Government for the return of 40pc revenue owed to the state once it gets the figures in black and white.
He said a technical committee under the Malaysia Agreement 1963 was formed specifically for getting the date and details on the amount of revenue the Federal Government had obtained from Sabah over the years.
This will give us a baseline for the calculation of the 40pc claim. Masidi explained that the interim payments (special grants) made by the Federal Government was because the state had already begun the process when they wrote in on June 10, 2022.
Ewon, who is also Entrepreneur Development and Cooperatives Minister stated last year the Federal Government has agreed to finalise the implementation of the formula for Sabah’s 40 per cent revenue by July this year. Ewon is part of the committee.
In the latest setback for Sabah, Deputy Prime Minister Fadillah Yusof said the structure of the Malaysia Agreement 1963 Implementation Action Council Technical Committee (JKMTPMA63) will be reorganised to discuss matters arising from the MA63 agreement.
Fadillah said the reorganisation is needed after Papar Member of Parliament Armizan Mohd Ali, previously in charge of Sabah and Sarawak affairs, was appointed as the Minister of Domestic Trade and Cost of Living in the Cabinet reshuffle in December last year.
Fadillah confirmed that the Malaysia Agreement 1963 Implementation Action Council (MTPMA63) had discussed the mechanism for the repayment of 40 per cent of the Federal revenue to Sabah.
Every cabinet reshuffle, and shifting responsibilities, puts Sabah at a disadvantage, and delay the process of the 40pc negotiations even further.
If our state and federal ministers are not on the same page on a crucial matter affecting Sabah rights, it will hamper Sabah’s claims to the rightful share of revenue derived from Sabah.
Putting a sole Sabahan on the tax revenue board will not help in getting the tax revenue details, especially the ones backdated to the formation of Malaysia.
Those who have sat on a board, where you are outgunned and outnumbered, knows what I am talking about. You will need an army to shift through years of tax receipts, not a lone ranger.
Will a letter without an amount stated will suffice? Its just a letter of notice, and without any figure on the amount of claim, it comes to nought.
Even if the formula is agreed by July, there is still the issue of how much?
And can the Federal Government pay its dues to Sabah?
Looks like the 40pc revenue sharing saga will continue.
The best is for SLS to win its case and force the Federal Government to pay. In the meantime, the Sabah Government should write to the Prime Minister for RM30 billion to be paid into the state sovereign fund pending the settlement of the total claims.
The amount is less than one year of dividends paid by Petronas to the Federal Government.
The money received should be given out as Amanah Saham SMJ to the long-suffering people of Sabah who are facing daily water shortages, power outages, damage to their vehicles for driving over potholes, internet outages, and many more that makes your life miserable.
- The views expressed here are the views of the writer Datuk Johan Arriffin and do not necessarily reflect those of the Daily Express.
- If you have something to share, write to us at: [email protected]
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