KUALA LUMPUR, Aug 25 — Tax revenue collected by the federal government is redistributed fairly to all states via federal development projects, said Deputy Finance Minister Lim Hui Ying.
She said the development projects include education, health, security, transportation and others.
“These include, for example, the implementation of the Pan Borneo Highway project in Sabah and Sarawak, the Kota Bharu to Kuala Krai Highway Construction Project in Kelantan, the Central Spine Road in Pahang and Kelantan, and the Gemas-Johor Bahru Double Track Railway project,” she said during a question-and-answer session at the Dewan Rakyat today.
She was replying to a question from Chow Kon Yeow (Harapan-Batu Kawan) about the federal government‘s sharing of tax revenue with the states to support development, welfare, and social programmes.
Lim said tax revenue redistribution to the states is made through the mechanism of the federal government’s annual grants to state governments, in addition to development allocations approved each year through the budget.
She said this allocation is done through annual grants in line with provisions in the Federal Constitution, laws, and Cabinet and National Finance Council decisions.
“The federal government allocated RM2.5 billion to the Penang government in 2025.
“Among the development projects being implemented in Penang are the Mutiara Line LRT project with an estimated cost of RM16.82 billion, the Mengkuang Dam Expansion project (RM1.2 billion) and the Sewage Treatment Plant Upgrading and Sewerage Pipe Network Construction project in Mak Mandin (RM667 million),” she said.
She said the federal government’s grants for Penang also increased this year to RM360 million from RM352 million last year.
“The state road maintenance grant (Marris) to Penang is among the largest allocations under the federal government grants, amounting to RM225 million for 2025 compared with RM222 million last year,” she said.
Replying to Chow’s supplementary question on whether the federal government would consider revising the Constitution to share tax revenue by 20 per cent or 30 per cent, Lim said the government is committed to ensuring that tax revenue is redistributed to all states.
She said the redistribution is made through annual grants as well as development projects funded by the federal development expenditure each year.
Replying to a question from Roslan Hashim (PN-Kulim Bandar Baharu) regarding the government’s steps to ensure states such as Kedah, Kelantan, Terengganu and Perlis also receive fair distribution of development, Lim said the matter is being given serious attention.
She said that the redistribution is made based on the calculation formula set under the Federal Constitution, laws, the National Finance Council decisions and the Cabinet decisions.
“Grants based on population or capitation grants are calculated according to the population census report issued by the Statistics Department (DOSM), Marris payments, analysis in terms of the level of economic development, infrastructure and well-being (TAHAP grants), and also growth revenue grants,” she said.
She stressed that the federal government is committed to not marginalising any state by always observing the existing formula to ensure each state receives allocations fairly.
