Kitingan rebuts claims on Sabah’s 40 per cent revenue entitlement and federal spending

KOTA KINABALU - Datuk Seri Dr Jeffrey Kitingan hit back at claims that the Federal Government did not siphon Sabah’s resources and urged an end to politicising Sabah’s 40 per cent net revenue entitlement.

The Sabah STAR president said the 40 per cent is Sabah’s and Sabahans’ constitutional right.

“It is neither a gift nor subsidy,” he said, refuting Treasury secretary-general Datuk Johan Mahmood Merican’s statement on federal expenditure in Sabah.

He said the claim that RM13bil to RM14bil previously, and RM17bil projected for 2026, exceeded the 40 per cent entitlement was wrong.

Kitingan said the statements were misleading and unconstitutional.

He said Article 112C and Part IV of the Tenth Schedule base Sabah’s 40 per cent on revenues derived from Sabah, adding that this is not based on federal expenditure in Sabah.

“Federal spending on salaries or projects in Sabah has nothing to do with Sabah’s Constitutional share,” he said.

He said publicly available data and ministerial disclosures show the Federal Government collected about RM50 billion annually from Sabah in 2023 and 2024.

Kitingan said this means RM20bil belongs to Sabah, which is 40 per cent and added that RM30bil is the federal share, which is 60 per cent.

He said that revenues derived from Sabah are not limited to taxes collected within the state.

“They include import and excise duties on vehicles sold in Sabah,” he said.

He said this applies even if vehicles are assembled or imported in Malaya and duties are collected there.

“The duties are paid upfront by manufacturers, but buyers in Sabah ultimately bear the cost,” he said.

He said this makes Sabah derived revenues.

Kitingan said revenues also include petroleum income tax paid by international oil companies operating in Sabah waters.

He said taxes from large corporations such as FGV, Felda and other listed plantation and industrial companies are included.

He said these firms operate profitably in Sabah.

“This also includes revenues collected by federal departments and agencies in Sabah,” he said.

He cited Customs, the Road Transport Department, the National Registration Department and Immigration.

“All these are included under the Federal Government’s total receipts from Sabah,” said Kitingan.

“Forty percent of that must be returned to Sabah as clearly stated in the Constitution,” he added.

Kitingan said the Treasury’s argument that RM17 billion in federal expenditure offsets the 40 per cent is dishonest.

He said the RM17 billion includes salaries, emoluments and operational costs for teachers, doctors and nurses.

He said it also includes costs for police, soldiers and civil servants and added that these are Federal obligations in every state.

“To imply that Sabah must fund these through its 40 per cent entitlement is false accounting.

“Even if we accept their inflated numbers, which we do not, the federal government would still have a surplus of RM13 billion every year from Sabah’s revenues. That is money taken from Sabah and used elsewhere,” he said.

He added that part of the 60 per cent federal share is meant for national security and development parity.

He said this covers Sabah and other states in Malaysia.

“Calling this a subsidy or burden on the federal government is a blatant lie,” he said.

He said it is meant to turn Malaysians against Sabahans for demanding lawful rights and reminded the Federal Government that the 40 per cent special grant is not Sabah’s only constitutional entitlement.

“Under Part V of the 10th Schedule, Sabah is also entitled to import and excise duties on petroleum products,” he said.

He said this amounts to more than RM1 billion annually, adding that Sabah is entitled to export duties on crude petroleum up to 10 per cent ad valorem.

He said this is equivalent to about RM4 billion a year.

“These provisions exist because Sabah and Sarawak were recognised as equal partners in the Federation,” he said.

“The Federal Government cannot, under Article 110, pass any law to block these rights or prevent Sabah from imposing oil royalties,” he added.

He demanded that federal officers stop acting like political operatives and uphold the Constitution.

He said they must not twist figures to serve political masters. - THE STAR