Don’t be vassal state, don’t overtax private sector, Sabah govt told

Yap-Pak-LeongKOTA KINABALU: Sabah should not be a vassal state of the federal government, a former state minister said today.

Yap Pak Leong also said it was time for the Sabah government to help the local private sector by removing certain taxes imposed on them.

“In my maiden speech in the Sabah State Legislative Assembly (in 1967) I asked the then chief minister and other leaders to be careful not to become vassals of the prime minister of the federal government.

“I still do the same outside the Sabah State Legislative Assembly, and ask the state leaders to look at and repeat the oaths of office they have taken,” Yap said in a comment piece in Borneo Today.

Yap served as state minister in the ministry of manpower and environmental development of Sabah from 1976 to 1979 and the ministry of local government and housing of Sabah from 1976 to 1982. The accountant is now a director in a public-listed company.

Yap said it was agreed, as a condition for Sabah joining and forming Malaysia in 1962, that 40% of federal revenue derived from Sabah should be given to the Sabah government every year and that Sabah be entitled to mining royalty revenue, including from fossil oil, land and other natural resources.

This, he said, was agreed to by the British, Malayan and Singapore leaders and written into the Malaysian Federal Constitution.

However, as a result of the proclamation of Emergency on May 13, 1969, Sabah lost her constitutional financial rights until the emergency was lifted by Abdullah Badawi when he was prime minister.

Yap also said the Sabah state government, for many years now, had been overtaxing the Sabah private sector by way of a Sabah state sales tax of 7% on palm oil and 15% on public lottery.

“The Sabah state government imposed these sales taxes because it did not have enough state revenue for required state expenses. It did not have enough revenue because the 40% constitutional share of federal revenue and oil royalty were not available under the emergency.”

“It is amazing that even after the lifting of the emergency (for) so many years now, the situation remains unchanged. By this very big state sales tax the Sabah state government has overtaxed the Sabah private sector by about RM1.1 billion per year.”

He said the Sabah private sector did not participate in several economic initiatives of the state government because “they lose RM1.1 billion to the Sabah state government each year’.

“So almost all the new investments in Sabah in hotels, commercial complexes etc, huge prawn farms, paper mills etc are undertaken by Malayan investors who have not suffered from non-existent state sales taxes in Malaya, and rich foreign investors from Singapore and China.

“This Sabah private sector weakness will remain until the state government abolishes Sabah sales taxes on palm oil and public lottery and replaces them with our constitutional 10% oil royalty collection from all oil companies extracting oil in Sabah, and the implementation of the 40% share of federal taxes derived from Sabah.”

Yap warned that the continued “weakness” of the Sabah private sector would have serious adverse economic, political and social consequences in Sabah.