KOTA BARU: The people of Sarawak will feel the pinch when the state government imposes a five per cent sales tax on petroleum.
Prime Minister Tun Dr Mahathir Mohamad said this was because the additional tax imposed would be borne by the people in the state.
“They (the people of Sarawak) will bear the burden if additional sales tax are imposed. They will buy fuel at higher prices,” he told a Press conference here today.
Dr Mahathir was commenting on the move by Sarawak state government, for the first time, to impose five per cent sales tax on petroleum products beginning Jan 1.
It is learnt that the new sales tax is expected to contribute significantly to the state revenue to support the government’s expenditure when the party that rules Sarawak was not anymore under Barisan Nasional after the recent 14th General Election.
On the five per cent royalty that was asked by the Kelantan government, Dr Mahathir said the Federal government would study the matter.
“Efforts on how to present the royalty payment to Kelantan will be known later,” he said.
The Kelantan government is asking for a five per cent royalty payment from the petroleum production.
Dr Mahathir said the state government was not in agreement with a plan to give it 20 per cent from the royalty profit.
“They want half of the production cost, meaning 40 per cent,” he said, adding that if that happened Petronas would be bankrupt.
It was reported on Nov 5 that a five per cent sales tax would be imposed on petroleum products in Sarawak beginning Jan 1.
Chief Minister Datuk Patinggi Abang Johari Abang Openg was reported to have said after thorough analysis and careful consideration the state government had decided to impose the tax on crude oil, natural gas, liquefied natural gas, chemical-based fertilisers and gas-to-liquid products.
He said the revenue expected from the imposition of sales tax on these petroleum products was an estimated RM3.897 billion next year. — Reports by Anwar Hussin, Sharifah Mahsinah Abdullah, Muhamad Razis Ismail and Mohd Zulkifli Zainuddin