Return portion of income tax to states: Exco man

THE federal government has been urged to return a portion of the income tax collected from the rakyat back to the states based on their respective gross domestic product (GDP).

Selangor executive councillor Datuk Teng Chang Khim pointed out that the state government only collects land-related taxes, which makes up about three-quarters of the state’s overall revenue.

This included land premiums, land tax revenue and land-related deals.

“At the state level, we (Selangor) only collect one form of tax, and that is the land tax. Income tax on the other hand, be it 3% or the maximum 26% of an individual’s salary, is all paid to the federal state.

“By right, a portion of this collection should be returned to us. From the 26% collected for example, maybe return 5% of it. We are not asking to return the sum based on our GDP.

“This will enrich Selangor’s economy and will help us implement more programmes for the rakyat,” he said at the state legislative assembly yesterday.

Teng, who is the Investment, Industrialisation and Trade, and Small and Medium Industries committee chairman, said this in his winding up speech for the state’s 2019 Budget.

Selangor contributes about 23% of the national GDP, and has been the country’s top contributing state for several years.

On state opposition leader Rizam Ismail’s call for the Selangor government to introduce new taxes that were not a burden to the rakyat to help boost revenue, Teng said this was impossible as the impact of such taxes would eventually be felt by the people.

“Sungai Air Tawar (Rizam) had asked that a carbon tax be introduced. This tax, although charged on the industry, will eventually be passed down to the rakyat,” he said.

Rizam, when debating the budget on Monday, had argued that it was pertinent for the state government to introduce new taxes as they were relying too heavily on landrelated premiums and revenues.

He warned that Selangor would face issues in the future when many of these lands would complete their conversion process.