Yong: Take up with KL on palm oil double tax

Yong: Take up with KL on palm oil double tax
20 November, 2007

Kota Kinabalu: The State Government has been urged to take up with the Federal Government the issue of double taxation on the palm oil industry in Sabah.

Sabah Progressive Party president Datuk Seri Panglima Yong Teck Lee who made the call said at today's prices, the tax amounts to RM30 per tonne of FFB which would costs the Sabah economy at least hundreds of millions of ringgit per annum.

The double taxation arose after the imposition of a new federal cess in June this year whereby the Malaysian Palm Oil Board imposed a graduating scale of taxes on Fresh Fruit Brunch produced by planters supposedly as subsidies for cooking oil.

"This tax for cooking oil subsidy is controversial because it is unfair for the Sabah palm oil industry to bear a disproportionately high subsidy for cooking oil prices when the population of consumers in Sabah is much smaller than that of the rest of the country which have a proportionately smaller palm oil production per capita," he said in a statement on the State Budget 2008 Monday.

"SAPP also feels that the time has come for a downward revision of foreign workers' levies for agricultural workers in order to allow the continued growth of the oil palm industry which has become a major revenue earner for Sabah.

"With competition coming from huge Indonesian oil palm plantations, the levy on plantation foreign workers, who come almost exclusively from Indonesia, should be reduced by at least RM100 per head.

"This is to prevent a shortage of workers that could stifle the oil palm industry within the next few years.

On the RM 2.33 billion budget for next year Yong said it proves that the State government has diversified its revenue base and built up enough reserves for future development plans.

This is a clear sign that the State Government's halatuju announced three years ago by Chief Minister, Datuk Seri Musa Aman, is working well and will stir more confidence among the people on the State economy, he said.

"In the 1970s and 1980s, the State Government was too dependent on timber royalties to the extent that when the timber industry weakened, State revenues became perilously low. That over dependence on a single source of revenue, which was timber royalties, was a major concern of the State leaders at the time.

"A former Minister of Finance once bemoaned the dilemma facing the State that when timber prices fell Sabah then had to cut more trees in order to balance the budget.

"But now, we see that oil palm and gaming taxes, petroleum royalties and dividends from investments constitute a major chunk of State incomes.

Forestry revenues have taken a back seat, which is a good thing."

According to Yong the projected timber royalties of only RM235 million due to reduced logging is consistent with the ITTO (International Tropical Timber Organisation) principles of sustainable forest management.

The sustainable forest management practised over the last decade is helping our natural forests re-grow for the future generations, he said.

"In the meantime, logs certified by the Forest Stewardship Council (FSC-certified) as coming from sustainably-managed forests fetch premium prices," he said, adding, "this is a win-win for Sabah in the short and long term."