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Call to abolish windfall tax

KUALA LUMPUR: OIL palm planters are reiterating their long-drawn appeal to the government to abolish the windfall tax, as it is seen as a deterrent for new investments.

“Planters are having a tough time with slimmer profits following worker shortages and the implementation of the minimum wage,” said Malaysian Estate Owners Association (MEOA) president Boon Weng Siew. 

“Since the government restructured the CPO tax this year, it should have also abolished the windfall tax,” he added.

When CPO trades above RM2,250 a tonne, planters pay a 4.5 per cent export duty and when the price rises above RM2,500, planters have to pay 5.5 per cent export duty as well as windfall tax. 

“This double taxation is punitive to oil palm planters in Peninsular Malaysia,” Boon said.

He noted that oil palm planters in the Peninsular are expected to start paying windfall tax soon as the average crude palm oil price is nearing RM2,500 a tonne in the cash market. Planters in Sabah and Sarawak only need to pay windfall tax if the price crosses RM3,000 per tonne.

On top of the CPO export duty and windfall tax, oil palm planters also have to pay a 25 per cent corporate tax, cess amounting to RM13 per tonne of CPO, as well as a 7.5 per cent and 5.0 per cent sales tax in Sabah and Sarawak, respectively.

When compared to businesses in other sectors that just pay 25 per cent of corporate tax, it is obvious that oil palm planters are the most heavily taxed in the country.

It is even more punishing in Sabah and Sarawak. For every RM1 an oil palm planter in Sabah earns, he pays 40 sen in total cess and taxes, while in Sarawak, it is 37 sen.

MEOA also urges the government to cancel the cooking oil subsidy, which benefits restaurant operators, traders and people across the border more than the hardcore poor.

Currently, 75,000 tonnes of subsidised cooking oil are produced monthly when only 40,000 tonnes are needed for household consumption.

Subsidised cooking oil is now capped at RM2.50 a kg against the open market price of more than RM4 a kg in Thailand, Indonesia, Singapore and the Philippines.

“The price of palm-based cooking oil should be allowed to float in the open market,” said Boon, adding that cooking oil vouchers can be issued to poor households to mitigate the impact of higher prices should the government do away with the subsidy. 

Palm Oil Refiners Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad concurs with MEOA that Malaysia does not need 75,000 tonnes of subsidised cooking oil a month, which is equivalent to 31kg per capita. The global average oil and fats consumption is only 20kg per capita.

Poram also urges the government to remove the five per cent export duty on refined palm kernel oil (PKO). Refined PKO is the only processed variant that is taxed across the value chain.

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