Few Malaysians fully grasp the significance of the Sabah Law Society’s (SLS) landmark victory in asserting Sabah’s constitutional entitlement to 40% sharing of federal tax revenue on tax collected in Sabah, as guaranteed under Articles 112C and 112D of the Federal Constitution.
By taking the bold step of challenging the federal government, the SLS has acted in the best interest of the people of Sabah, defending their rightful share and upholding the spirit of the Malaysia Agreement 1963.
SLS has accomplished more than all past and present political leaders combined, in securing this landmark ruling in the High Court of Borneo.
While politicians have long traded blame over each other’s failures, and some have even rushed to claim credit as champions of the 40% entitlement, it is the SLS that truly deserves recognition. Their steadfast dedication, legal acumen and commitment to justice have achieved what decades of political rhetoric could not.
West Malaysians are now beginning to realise that Sabah is not merely one of Malaysia’s thirteen states, but a distinct entity with its own unique and constitutionally guaranteed rights — rights that set it apart from the other states in the federation.
Sabah and Sarawak are recognised as “wilayah”, a separate and distinct region in Malaysia. Without Sabah and Sarawak, there would be no Malaysia, only the former Federation of Malaya.
Unfortunately, this fundamental fact is rarely acknowledged or taught in Malaysian history, leaving generations unaware of the true origins and spirit of the federation. The 40% tax sharing was a condition for North Borneo joining Singapore to form Malaysia.
When Singapore joined Malaysia, it was agreed that revenue from federal taxes collected in Singapore would be shared, with 60% retained by the Singapore government and 40% remitted to the federal government. Singapore collected the taxes and duly transferred the federal portion.
In Sabah’s case, however, the situation is the reverse. The federal government collects all federally entitled taxes but has failed to return the 40% share due to Sabah.
The 47 years of unpaid entitlement, as highlighted by SLS, is estimated to amount to billions of ringgit and poses a significant dilemma for a cash-strapped federal government already burdened by mounting national debt.
There is little sympathy among Sabahans, who have long endured the indignity of being labelled the poorest state in Malaysia despite contributing immensely to the nation’s development through taxes and the extraction of their abundant oil and gas resources.
The controversial Project IC, engineered by elements within Malaysia’s deep state, has further strained Sabah’s limited resources and deprived genuine Sabahans of a better quality of life. Despite the findings of the Royal Commission of Inquiry on Sabah’s sudden population surge, no one has been held accountable.
Today, Sabahans are forced to compete with a massive influx of undocumented migrants for jobs, land, social welfare, and access to already overstretched public infrastructure.
The federal government now finds itself in a classic Catch-22 situation, damned if we do, damned if we don’t.
While it has the right to appeal the High Court’s ruling, doing so risks severe political repercussions ahead of Sabah’s 17th state election in November.
Many Sabahans have urged Putrajaya not to challenge the court’s decision, viewing an appeal as a betrayal of Sabah’s constitutional rights.
Should the federal government proceed with an appeal, coalition parties under Prime Minister Anwar Ibrahim’s unity government may face a backlash at the polls, potentially losing contested seats in Sabah.
This dilemma is further complicated by the crowded electoral field, with Barisan Nasional, and Pakatan Harapan contesting alongside Perikatan Nasional.
Other states may now question why Sabah deserves special treatment. The answer lies in the very foundation of Malaysia’s formation. When our founding leaders negotiated the terms of federation, Sabah’s representatives foresaw the challenges ahead.
As one of the most underdeveloped territories at the time, with vast land area and limited infrastructure, Sabah required greater fiscal autonomy to support its development. This understanding led to the inclusion of the 40% revenue-sharing provision in the Federal Constitution.
As Malaysians, we are taught to respect the constitution, which is the supreme law. If the federal government fails to honour Sabah’s constitutional rights, it risks undermining the rule of law and reducing the constitution to a document open to unlawful manipulation.
Given the choice, Sabah could have parted ways with Malaysia in 1965 and become a successful independent economic powerhouse, without all the race and religion baggage dragging it down.
Throughout its 61 years as part of Malaysia, Sabah has shared its wealth with all the states in Malaysia and sacrificed much. It’s time for Malaysia to return the favour.
As a reminder, in May 2023, Anwar said persisting with an appeal in the “Allah” court dispute with a Sarawakian Christian would have been futile as the Cabinet in 1986 and the Conference of Rulers had decided that non-Muslims in Sabah and Sarawak could use the word under certain conditions.
He was quoted saying, “If one insists on going to court knowing very well that there is no case, then it can only mean that he is not wise.”
The same applies to Sabah 40% case.
The views expressed are those of the writer and do not necessarily reflect those of FMT.