KUALA LUMPUR, Nov 19 — The federal budget, at RM191 billion next year, is huge relative to the states.
The four Pakatan Rakyat states — Selangor, Penang, Kedah and Kelantan — depend on a mix of local and federal funds for their budgets.
Federal funds come in the form of royalty payments for natural resources such as sand, timber and oil. The states also get what are called capitation grants, the sum of which varies with the size of their populations. They also raise their own revenues from property taxes and levies on profits from commercial undertakings.
For rich states such as Selangor and Penang, the federal grants are tiny relative to the taxes they pay to the central government. Selangor gets RM240 million in federal grants but companies and individuals in the state are expected to pay RM16 billion in federal taxes this year.
Penang is expected to pay RM3 billion in federal taxes, but will receive RM100 million as grants.
Opposition states say inequity aside, the federal government is making it hard for them to fund development projects. — The Straits Times
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