KUALA LUMPUR, May 17 — The revenue derived from the petroleum sector this year will almost double to an estimated RM60 billion against RM38 billion raked in last year, thanks to the steady rise in global oil prices which is currently hovering around US$79.41 (RM315) per barrel.
This is good news for Malaysia, which is a net oil exporter of crude oil.
It will also complement the newly-formed government’s pledge to abolish the six per cent Goods and Services Tax.
Hermana Capital Bhd Chief Executive Officer and Chief Investment Officer Datuk Dr Nazri Khan Adam Khan opined that the RM38 billion revenue was earned from the petroleum sector when crude oil prives were fetching US$52 per barrel.
“That (the revenue) is like 15 per cent of government revenue and with oil prices now trading at about US$80 per barrel, the government’s petroleum revenue would likely increase to 25 per cent.
“And, this revenue does not include the dividend accrued from Petronas,” he told Bernama today.
Besides, the government would also have additional revenue now with the re-introduction of the Sales and Services Tax (SST).
The Finance Ministry yesterday said fiscal reform initiatives are under way following the announcement that the GST would be zero-rated effective June 1, 2018.
Following the abolition of the tax regime, the Pakatan Harapan-led government, which had promised to eliminate the GST in the first 100 days after taking office, would instead re-introduce the SST.
Under former Prime Minister Datuk Seri Najib Razak’s administration, the government collected RM44 billion from GST in 2017, slightly higher compared with RM41 billion in 2016.
The six per cent GST was implemented on April 1, 2015 to replace the SST in Malaysia which was among 160 other countries which had already implemented it.
Najib had said then that with the introduction of the GST, the government would be able to resolve weaknesses in the current taxation system such as the impact of double taxation, absence of full tax relief on exported goods and issues over transfer pricing.
“If we were to buy a carbonated drink in a restaurant today, we are paying double taxes – sales tax and service tax,” he pointed out. “With the GST system, consumers will only need to pay tax once, and the price of goods should be cheaper,” he was quoted as saying when presenting the 2014 Budget in Parliament.
The tax was introduced on 553 types of zero-rated goods and services while another 25 were GST-exempt.
Nazri said the abolishment of the GST would boost the economy, buying sentiment and also reduce property prices.
Meanwhile, former Bank Negara Governor Tan Sri Zeti Akhtar Aziz had said Malaysia would be able to meet its revenue requirements even after shelving the GST by prioritising projects, increasing public sector efficiency, avoiding wastage and exploring new sources of revenue.
Saying that the Malaysian economy was steadfast, she expressed confidence that it can be steered towards the right direction and the 100-day time frame was adequate to provide clarity and make necessary adjustments and changes. — Bernama