Is Sabah entitled to a 30% customs tax?

By Remy Majangkim, MA63, Activist, Tutor, and Historian


KOTA KINABALU: Good day, everyone, and I wish you a great day. As of March 1, 2024, the Royal Customs of Malaysia has increased the Sales and Services Tax, or SST, rate from 6% to 8%. This is set by the Federal Government under the Finance Ministry and is projected to collect RM3 billion in revenue for the country.
Prior to the formation of Malaysia, the British sought to include a uniquely tailored provision, providing additional income to the State of Sabah. During the negotiations thus concluded, the Inter Government Report (IGC) ultimately made its way to the Federal Constitution. It says the following:.

Part V, (4)
Additional revenue sources assigned to the states of Sabah and Sarawak.
“In the case of Sabah, so long as medicine and health remain an item in the concurrent list and expenses in respect of that item are borne by the state, 30 percent of all customs revenue other than that in respect of the duties mentioned in sections 1, 2, and 3.”

Here are the steps for both the federal and state governments.
1) As of today, medicine and health still remain on the concurrent list, thus obligating the Federal Government on their duties.
1) This provision needs to be read together with Sections 1.2 and 3 as an additional source of revenue assigned to the States of Sabah and Sarawak.
2) All Members of Parliament have sworn an oath to uphold the Constitution; therefore, it is their solemn duty to see Sabah get their share.
3) The State Government of Sabah needs to follow through with the Federal Government to comply as written in the Federal Constitution.

As a reminder, the federal government needs full implementation of this provision or risk another documented breach of an international agreement. The State of Sabah needs to collectively pursue this matter vigorously.

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