21/09/2008 (Daily Express), Kota Kinabalu - Former Chief Minister Datuk Harris Salleh has proposed the abolition of the Federal Government and Malaysia Palm Oil Board (MPOB) taxes on the oil palm industry in Sabah.

He said the proposal was based on dissatisfaction voiced by the Sabah smallholders themselves that the MPOB cess and windfall taxes collected by the Federal Government were not benefiting them directly.

Instead, the taxes collected are put into the Federal Consolidated Fund, which is being used to subsidise Malaysian plantations, he said.

Harris said the grouse was legitimate because the smallholders realised that Sabah, as the biggest oil palm producer, is being used as a cash cow to be milked not for their benefit, but more for West Malaysian plantations.

"On top of these multiple taxes they still have to pay their annual income tax to the Federal Government just like any other business," he said.

However, the taxes imposed by the State Government should remain so as to help the State have some funds to be channeled to sectors in the State's agricultural industry.

Further elaborating, he said compared to the plantations in other Malaysian states, Sabah's plantations were not getting equal treatment.

"It is only in Sabah that oil palm plantations have to pay 7.5 per cent Sales Tax, sales discounts of RM40 per tonne have to be paid to the State government, MPOB cess of RM15 per tonne is imposed and 7.5 per cent windfall taxes for CPO and 7.5 per cent for crude palm kernel oil have to be paid to the Federal government," he said.

Based on the 5,561,485 tonnes of CPO produced by Sabah planters last year, RM987million from sales tax had been collected by the State government, RM222.5 million for Sabah discount (RM40 extra payment for freight) and RM83.42 million from cess collected by MPOB.

"It is never a good practice for Malaysia to have multiple taxes imposed on a single produce, all the more so when these taxes and levies are being imposed at the spur of the moment," he said.

Harris said such practice has not been applied on other kinds of manufactured goods, although there were instances when certain businesses have been caught flat-footed by revised taxes that were imposed without being given sufficient time to plan and adjust their financial planning and budget.

"In the case of the oil palm industry especially, the practice of taking from the left hand and giving to the right hand in the form of subsidies must stop," he said.

"The general picture most people have, that the oil palm industry is a golden industry, is misleading. It is in fact on the way to being a sunset industry, especially for smallholders," he said.

Based on an average crude palm oil (CPO) price on a 25-year cycle from 1980 to October 2007, the actual net CPO average is RM1,174.52 per tonne and the actual Gross Fresh Fruit Bunch (FFB) price for FFB suppliers is RM170.20 per tonne.

"What a huge drain these taxes have made and no wonder the smallholders are already beginning to see the sunset," he said.

Harris said smallholders besides being burdened by the numerous taxes and cess, those particularly in the interior such as Tenom and Keningau, have also had to endure the poor road infrastructure and the high cost of employing foreign workers.

He said the long distance for the smallholders to transport their FFB produce alone added further costs to them in the midst of higher costs in the interior for fertilisers, chemical utensils, wages and other incidental costs.

High levy, which is imposed on foreign workers and have to be paid in advance annually and not refundable if the workers failed to work for one year, was also a factor.

To add to their problems and worries, the plantations whether big or small were now being put under siege by the Government's action to rid the State of illegal workers, he said.

Harris agreed with Palm Oil Industrial Cluster (POIC) Sabah Chief Executive Officer Dr Pang Teck Wai in the Daily Express that the high price of fertiliser in Sabah would remain a factor adversely affecting the profitability of CPO in the future.