Petroleum royalty expected to top again

Petroleum royalty expected to top again

Published on: Saturday, November 10, 2018

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Kota Kinabalu:PETROLEUM royalty is expected to remain as the highest contributor to 2019’s total revenue estimates, accounting for 37.5 per cent, with a projected collection of RM1.6 billion, said Chief Minister Datuk Seri Mohd Shafie Apdal.


“This is based on the payments received by the Sabah Government this year amounting to RM1.61 billion, the highest amount of petroleum royalty ever received in the history of Sabah,” he said when tabling the 2019 State Budget.


“This amount also exceeds this year’s estimate of RM1.32 billion subsequent to the increase in price and production of petroleum.”


The estimated revenue for next year is classified into three main categories, namely Tax Revenue, Non-Tax Revenue and Non-Revenue Receipts.


“Of the RM4.27 billion revenue collection, RM1.13 billion or 26.4 per cent is Tax Revenue; RM2.74 billion or 64.1 per cent Non-Tax Revenue; and RM403.5 million or 9.5 per cent Non-Revenue Receipts,” he said.


State Sales Tax on Crude Palm Oil (CPO), which leads in the Tax Revenue category, remains as the second highest contributor to the State’s revenue.


“It is expected that the price of CPO could reach at RM2,400 per metric tonne, with a production of more than five million tonnes in 2019. Therefore, the Sabah Government has projected a collection of RM900 million from this source.


“Meanwhile, revenue estimates for next year on State Sales Tax on lottery tickets are expected to remain the same as this year’s estimate of RM60 million.”


He said the State Sales Tax (Tax Rate) Order 2014 which allows the Sabah Government to impose tax on fishery commodities that are brought out from Sabah has already been gazetted. However, tax collection has not started.


“Due to a high number of complaints on insufficient high-quality fish supply for local consumption, the Government will commence the collection of sales tax on fishery commodities brought out of Sabah at a rate of five per cent beginning next year.

“Revenue collection from this sales tax is estimated at RM20 million. This tax should not burden the people as it is not imposed on local consumption.


“It should be able to promote Sabah as a fresh and quality seafood haven at a reasonable price in this region,” he said.


The Non-Revenue Receipts category consists of Federal Government receipts and contribution which is estimated at RM403.2 million or 9.4 per cent of the total State revenue estimates in 2019.


Shafie also commended the Sabah Ports and Harbour Department’s remarkable revenue collection annually.


“The department is expected to collect RM45.8 million as compared to the original estimate of RM33.6 million for this year.


“The increase in revenue collection is due to enforcement on Ports and Harbour Dues which began on June 1, this year. For next year, the department is estimated to contribute RM45.4 million to the State’s revenue.”


The Forestry Department is estimated to contribute RM149.5 million or 3.5 per cent of the State’s total revenue for 2019.


“However, this amount is slightly lower than last year’s estimate. One of the main factors contributing to the decline is the ban on timber exports by the Sabah Government starting from May 23, this year.


“Moreover, returns on agro-forestry royalty are also expected to decline as a result of lower prices on oil palm and rubber,” he said.

While it is the responsibility of the State Finance Ministry to ensure adequate financial resources are available to support budgetary needs for each year, he said, it should also be noted that it should be collectively shouldered by all revenue collectors.


In this regard, the Lands and Surveys Department and Sabah Water Department have been given higher revenue targets for 2019.


“The Sabah Government hopes that this approach will stimulate both departments to increase their efforts in revenue collection, including measures to reduce the arrears.


“We noted that after revamping and restructuring the Sabah Water Department’s administration, RM66.8 million of revenue managed to be collected from August until the end of October this year.


“With such administrative and management improvements, the Sabah Water Department is expected to collect RM330.2 million revenue in 2019. This amount contributes 7.7 per cent to the total estimated revenue of the year.


“The increase in revenue collection will facilitate the Government to provide a higher allocation to fund programmes to improve quality, coverage and treated water supply to the rural areas which are still inadequate.”


Therefore, the State Government has set revenue collection estimates for the Lands and Surveys Department at RM285 million or equivalent to 6.7 per cent of the State’s total revenue estimates for 2019.


The Wildlife Department and the Veterinary Services Department are expected to collect RM20.8 million and RM4 million, respectively, in the same year, while the interest and investment returns are expected to decline with an estimate of RM369.5 million for 2019 compared to RM453 million this year.


“This decline is due to lower dividends received from statutory bodies and government agencies as well as lower tax refunds from the Inland Revenue Board.

Contribution from this category represents 8.6 per cent of the State’s total revenue estimates next year.


Shafie said to ensure that the 2019 State revenue target is successfully achieved, cooperation, commitment and initiative from all parties are vitally needed.


“All revenue collectors are advised to study and identify new sources of revenue that can be collected in order to increase the State’s revenue,” he said. – Ricardo Unto