Malaysia’s constitution centralises revenue collection – including all forms of taxes – at the federal level. The federal government then returns a percentage of this to the states based on their population.
According to a commentary posted on the ISEAS-Yusof Ishak Institute’s website in December 2023, state governments received revenue of RM926 per capita, about one-tenth of the federal government’s RM8,969 per capita tax in the year 2022.
In June last year, Tunku Ismail said Putrajaya should stop viewing Johor as “belonging to Malaysia”, likening the state to being a beggar for constantly having to highlight its needs.
He had then also urged the federal government to consider allowing Johor to keep 20 per cent to 30 per cent of its tax revenue in the state
“Until when is Johor going to be a beggar? The system in the federal government from then until now must change, as Johor does not belong to Malaysia. We are partners, so you have to start treating us like partners,” he was quoted as saying by news portal Scoop.
Tunku Ismail was appointed Johor regent at the end of January 2024 after his father ascended the throne to become Malaysia’s king for a five-year term.
Penang’s chief minister Chow Kon Yeow had in June this year also renewed calls for the federal government to consider returning 20 per cent of tax revenue to the state for its development.
He had said Penang continued to be among the top contributors to Malaysia’s national coffers, but has been “shortchanged” when it comes to federal allocations.
“Now is an appropriate time for the federal government to consider this seriously and not just push it aside,” he was quoted as saying by the News Straits Times.
Sabah has also for years also been trying to negotiate a return of its entitlement of 40 per cent of its revenue as stated in the federal constitution, which it says is crucial for economic development.
The Sabah Law Society has filed a judicial review on the matter in the High Court.
https://www.channelnewsasia.com/asia/malaysia-johor-regent-tunku-ismail-sultan-ibrahim-tax-revenue-federal-government-5253636
