KUCHING: Sarawakians can expect to pay more in sales tax to the state government in the future as it is now exploring new ways to fatten its coffers while minimising its reliance on revenue from natural resources.

Second Finance Minister Datuk Seri Wong Soon Koh announced the government’s plan in his winding-up speech but he did not specifically mention whether it would entail a hike in a current sales tax or the implementation of a new sales tax.

“The state will further explore the possibility of getting additional income from the state’s sales tax without putting unnecessary burden on the people and having negative impact on the economy.

“The state is always mindful of the need to balance between generating additional revenue and ensuring that the cost of living and the cost of doing business in the state remain competitive,” he said.

He pointed out that the state could not continue to just depend on revenue from natural resources, such as timber and oil and gas.

In 1998, he said the state imposed sales tax on palm oil and lottery and these had proven to be successful in helping boost the state’s revenue other than restructuring and diversifying the economic base.

The total collection of sales tax in 2010 was RM383mil, which is about 6.29% of the total revenue of RM5.6bil, an increase of 22.9% compared to the previous year. Two-thirds of the sales tax were from palm oil, while the rest was from lottery.

The increase was also due to the revenue derived from dividend and interest from investment amounting to RM2.1bil and royalty and premium from the forestry sector with a total collection of RM692mil.

When asked what kind of sales tax would be imposed, Wong told reporters that the government was still exploring it. “The government is in no hurry to implement the sales tax but we are just looking at the future to broaden our revenue base,” he said.

Timber accounted for about 35% to 40% of the state’s revenue before 2004 but the revenue had declined after that in line with the government’s policy on sustainable forest management.

Revenue from oil and gas royalty had grown to about 20% to 35% to become the state’s major revenue from 2004 to 2007.

Wong added that the dividend and interest income from its investment mainly in the oil and gas sector and investment in money market contributed to 40% of the state’s revenue last year.

Meanwhile, Wong reported that the revenue collection of RM1.8bil for the first quarter of this year was satisfactory.

On the expenditures for the first quarter of this year, a total of RM915mil of ordinary expenditure had been expended while RM476mil had been expended on development expenditure.

In addition, Wong also urged all to be rational in their spending habits and change of household spending and lifestyle to lessen the effects of rising prices.

He said the government might no longer be able to continue with the current subsidises or find alternative ways of channelling the subsidies to the target groups effectively.

(Source : The Star Online, 29/6/11)