GST: Sabah BN leaders need to examine their heads, says Jeffrey

Kota Kinabalu:    “The Sabah government leaders need to have their heads examined for wrongly supporting the implementation of GST in Sabah without considering the rights of Sabah and the welfare of Sabahans” said Datuk Dr. Jeffrey Kitingan, STAR Sabah Chief in response to the Chief Minister’s statement that the Government is supporting the implementation of GST in Sabah and the call by PBS to open talks with the federal government to safeguard Sabah’s revenue base that may be eroded by the GST.

The best formula for Sabah and Sabahans is still the exemption of GST in Sabah.  By right this should be the only and “non-negotiable” option to be adopted by the Sabah government if they genuinely look after the interests of Sabah and Sabahans.

The issue at hand is not whether the GST is a good or bad taxation system or whether Malaysia needs to introduce the GST.   These reasons are totally irrelevant in the context of Sabahans.   More so, when the federal government could have avoided GST by merely better managing the federal treasury and stop the corruption, wastages, excessive and uncontrolled over-spending which could save the nation tens of billion every year.

For the benefit of our Sabah government and BN leaders, it was agreed during the formation of Malaysia in 1963 that Sabah will have control of its own finance, tariffs and development funds.   It is also set out in Point No. 11 of the 20-Points which provides:-
Article 11  -North Borneo (Sabah) should have control of its own finance,         development funds and tariffs.

This sovereign right to impose sales tax was subsequently incorporated in Article 95B(3) of the Federal Constitution and it is deemed to be a matter under the State List under the 9th Schedule and not under the Federal List.    Section 95B(3) provides:-
“95B(3)    The Legislature of the State of Sabah or Sarawak may also make laws for imposing sales tax, and any sales tax imposed by State law in the State of Sabah and Sarawak shall be deemed to be among the matters enumerated in the State List and not in the Federal List; but –
(a)    There shall not in the charging or administration of a State sales tax be discrimination between the goods of the same description according to the place in which they originate; and
(b)    The charge for any federal sales tax shall be met out of sums collected from a person liable for that tax before the charge for a State sales tax.”

There are no two ways about it.   The Sabah government need to work towards a plan to secure exemption of GST in Sabah.  

Sabahans are already the poorest in Malaysia.  The Sabah government need to take every action to safeguard the interests of Sabahans.   Sabahans are not ready for GST and Sabah has the sovereign right to collect sales tax in Sabah and should not abrogate or sub-contract this right and the revenue collected to the federal government.    As it is,Sabahans are losing more than RM40 billion in revenue annually to the federal government and Petronas.

If the federal government still wish to impose the GST in Sabah, then the Sabah government should have no option but to take the federal government to court and declare that the federal GST as unconstitutional.

Separately, on the 2014 Budget, PBS should tell the people the truth and stop harping and hoodwinking them.  The projected expenditure of RM4.622 billion includes a government bonds repayment of RM568.9 billion while the projected revenue of RM4.583 billion includes a loan inflow of RM1.0 billion government bonds and an additional income of RM458.75 million due to an increase in the oil revenue.  If these 2 items are considered separately, the net revenue for Sabah in 2014 is only RM3.014 billion or RM3.583 billion if the additional oil revenueis included which is still considerably less than 2013’s revenue of RM3.828 billion.