Hajiji welcomes increase in special subsidy, but does not give up 40% tax revenue | Daily Express Online

Hajiji welcomes increase in special subsidy, but does not give up 40% tax revenue

Published on: Thursday April 14th, 2022

By: Durie Rainer Fong, FMT

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Hajiji Noor (second from left) during a video conference chaired by Prime Minister Ismail Sabri Yaakob today to discuss the 1963 Malaysia Agreement. (JKM photo)

Kota Kinabalu: The government of Sabah has welcomed the increase in the special grant paid to the state by Putrajaya. Chief Minister Hajiji Noor, however, said the state would not give up its pursuit of 40% of revenue collected by the federal government to be returned to Sabah. “It’s a very good development for Sabah. It shows that the federal government is ready to listen to us. It’s a positive sign.

“But negotiations are still ongoing to obtain the 40% as agreed in the Malaysia Agreement of 1963 (MA63),” he said in a statement today. Earlier today, Prime Minister Ismail Sabri Yaakob announced that Putrajaya would increase his annual payment to Sabah to RM125.6 million this year, more than four times the RM26.7 million previously paid. Ismail also said the amount would increase every year from 2023 to 2026 at a rate agreed by Putrajaya and the government of Sabah. He added that the move came after the federal and state governments reached consensus on revising the special grant granted to Sabah under Section 112D of the Federal Constitution. Deputy Chief Minister Bung Moktar Radin also endorsed the increase, saying many other development programs could be implemented in Sabah. “However, the special subsidy will mean nothing if our delivery system is not up to scratch,” the MP for Kinabatangan said in a statement. Opposition leaders have raised questions about the new amount of the special grant.

Upko Chairman Wilfred Madius Tangau urged state and federal governments to disclose the basis on which they agreed on the new amount. The Tuaran MP also expressed concern if the state would end up compromising its position on the 40% tax-sharing formula, provided for in Article 112C of the Federal Constitution. “Finance Minister Tengku Zafrul Aziz previously said that the new revenue-sharing formula between Sabah and the federal government would render the 40% formula inapplicable. How can you repeal section 112C like that? “We at Upko and Pakatan Harapan (PH) cannot agree on this and our position is that we will never compromise on the 40% formula,” he told FMT. Sabah DAP Secretary Phoong Jin Zhe denied it was the first time the special grant had been increased since 1969, in reference to Hajiji making such a claim in a Facebook post. The MP from Luyang said that the PH government actually increased the payment when it was in power in 2019. He said that then Finance Minister Lim Guan Eng announced during the tabling of the federal budget 2020 that rate would be doubled to RM53.4 million. .


He added that there were also plans to double the rate again to RM106.8 million over the next five years. “That means what the federal and state governments are doing right now basically comes down to the framework that was adopted under the PH administration. “But I still think it’s a good start to do the Sabahans justice.”
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