Sharifah Hasidah Sayeed Aman Ghazali

KUCHING: Assistant Minister of Law, State-Federal Relation and Project Monitoring Sharifah Hasidah Sayeed Aman Ghazali said she does not agree with constitutional law expert Prof Emeritus Datuk Dr Shad Saleem Faruqi’s opinion that Sarawak could not impose the sales tax on petroleum products.

Shad Saleem in a lecture on the spirit of Malaysia Agreement 1963 yesterday suggested that matters concerning petroleum products were in federal hands.

Sharifah Hasidah told The Borneo Post today: “We do not agree with Prof Shad, and we are aware of his arguments. Petronas put that up in our negotiations. But we have looked at this thoroughly and we have a strong counterargument.”

“If Prof Shad’s argument is right, then by the same token, that would also mean that there can be no federal tax on matters not in the federal list, like matters on land, for instance – the real property gain tax,” she stressed.

Her statement follows a dispute between Petronas and Sarawak on the state’s rights to impose sales tax on petroleum products under Article 95B(3) of the Federal Constitution and Sales Tax Ordinance 1998.

“Petronas has argued that Sarawak can acquire the power to impose sales tax but only over matters that are stated in the state list,” Shad Saleem said.

“Petroleum products are in the federal list. Therefore, any regulation or dealing on petroleum products is also in federal hands,” he said adding that the state could impose sales tax only on items in the state list such as escheat, treasure trove, agriculture, forests, markets and fairs, theatres, cinemas, places of amusement, turtles and riverine fishing.

Yesterday, Chief Minister Datuk Patinggi Abang Johari Tun Openg said he would make Petronas pay the five per cent sales tax on the export of petroleum and petroleum products from its operations in Sarawak.

“I will fight to the last in order to get Petronas to pay. Under our law (Oil Mining Ordinance), Petronas has to pay the sales tax. That is our right,” he stressed.