Guan Eng pours cold water on Penang’s petroleum tax plan

 Former finance minister Lim Guan Eng says Penang cannot come up with a new law to collect taxes from petroleum.

GEORGE TOWN: Lim Guan Eng (PH-Air Putih) today said it would be impractical for Penang to levy a sales tax on petroleum products in the event that oil is discovered offshore in the state.

The former finance minister said this was because Penang had no power to do so under the Federal Constitution.

“Sabah and Sarawak have special powers under the Malaysia Agreement 1963 under the Federal Constitution. Penang cannot come up with a new law (to collect taxes),” he told the Penang assembly in debating the 2024 state budget.

“Even the state legal adviser nodded in agreement when I said Penang has no constitutional rights to demand taxes from petroleum,” he said.

Previously, chief minister Chow Kon Yeow said Penang might consider taking Sarawak’s path to introduce a sales tax on petroleum products in the event that oil is found in its waters.

Chow said he had asked the state legal adviser to come up with a sales tax law similar to Sarawak’s and aim for a similar RM4 billion sales tax revenue.

Petronas recently said it was mapping the hydrocarbon potential of the Langkasuka Basin, which spans the waters of Perlis, Kedah and Penang.

In June, it was reported that Petronas and its subsidiaries had paid the Sarawak government RM1.2 billion in sales tax on petroleum products for the first quarter of 2023. - FMT