Hornbill Unleashed

October 19, 2016

DAP: Only 2.4% of federal revenue goes back to states

Filed under: Politics — Hornbill Unleashed @ 9:01 PM

Steven SimThe Federal Government must honour the status of the various partner states in both peninsular Malaysia and Borneo, and return what is rightful to the respective state governments.

In urging Putrajaya to honour “our federalism” DAP’s Bukit Mertajam MP Steven Sim said that the ruling Barisan Nasional government was unfair in its distribution based on the amount of revenue it takes from each state, with only 2.4% shared among the 13 states.

“The federal government is hoarding almost 98 per cent of the resources in the country. By hoarding resources, they are not only starving all the 13 states, but also effectively exerting extra-constitutional control over state governments.

“How can state governments develop their respective states with very little power to raise revenue, and with such meagre allocations from the federal government,” Sim said in a statement today, citing statistics that show that between 2009 and 2013, Putrajaya allocated a total of only 2.4 per cent of its budget to be shared among 13 states.

“Out of this meagre sum (2.4 per cent), Penang received a mere three per cent share. That is the third smallest amount among all the states in Malaysia. Only Malacca and Perlis received less,” he added.

“In other words, while Penang contributed more than 30 per cent in terms of balance of trade nationally, we receive 0.07 per cent out of the overall federal budget each year,” the Penang Institute Director said, highlighting the disproportion between the state’s contribution to the nation against the allocation returned by Putrajaya.

He added that it was not just his state but also poor states that seem to reflect this disparity

“Sarawak contributes 10 per cent of the national gross domestic product (GDP) but only receive about 0.4 per cent back from the national budget.

“Sarawak as well as Sabah and Kelantan, being the poorest states, should be given special federal grants to enable them to catch up on development,” Sim said.

Conversely, he said the states that contribute the most, namely Penang, Selangor and Johor should be given a greater share of the federal revenue to reflect their contributions.

“This is for these (three) states to properly manage their respective developments.”

Sim explained that with development, consumption, business and commercial activities all taking place within the boundaries of the state, it is ultimately down to the state and local governments to ensure local conditions are optimal for such activities, including provision and maintenance of critical infrastructure and public services.

“Since April 2015, the Federal Government is also collecting the GST from consumption activities that are taking place within state boundaries.

So, Putrajaya must thus work out a statutory formula to distribute revenue fairly between the federal and state governments and among the state governments,” he said.

FMT Reporters Online

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