Penang Chief Minister Chow Kon Yeow said the state is seeking a review of tax revenue distribution and wants the federal government to return 20% of the tax revenue collected to allow the state to implement programmes and projects more effectively.

GEORGE TOWN (May 29): The Penang government on Wednesday requested the federal government to review the tax revenue distribution system for states and return 20% of the taxes collected from the state.

Chief Minister Chow Kon Yeow said this would allow the state to implement programmes and projects more effectively, alongside the accelerating development of the semiconductor industry in Penang.

“There is nothing unfamiliar about this, and there are countries that practice it. If possible, we want the federal government to return 20% of the tax revenue collected from Penang back to this state.

“I was informed that the Inland Revenue Board collects between RM7 billion and RM8 billion in taxes from Penang. So, 20% of the amount means we will have over RM1 billion annually,” he said at the Penang state assembly sitting here.

He was responding to a supplementary question from Gooi Hsiao Leung (PH-Bukit Tengah) regarding the state government’s plan to collaborate with the federal government under the National Semiconductor Strategy (NSS) to develop semiconductor and electrical and electronics (E&E) chain companies.

Chow (PH-Padang Kota) said Penang is ready to play a role in ensuring the success of the NSS announced by Prime Minister Datuk Seri Anwar Ibrahim on Tuesday, as the state is the most advanced in terms of the semiconductor and E&E ecosystem in the country.

“Industries typically have economic spillover effects on other sectors such as real estate, transportation, services and recreation, which boost development in Penang. However, there is one shortcoming: the revenue from all this development is channelled to the federal government,” he said.

He also hoped that Invest Penang would assist entrepreneurs in the state in accessing incentives under the NSS to strengthen the economic ecosystem in Penang.

On Tuesday, Anwar said Malaysia’s semiconductor industry is set to experience a further boom under the NSS, with the nation set to woo at least RM500 billion of investments in the first phase of the plan.

Under NSS’ second phase, the nation is keen to establish at least 10 Malaysian companies in design and advanced packaging with revenues of between RM1 billion and RM4.7 billion (US$210 million and US$1 billion).