KUALA LUMPUR: Penang's proposal for the federal government to return 20 per cent of tax revenues collected from the state will require a significant constitutional amendment.
Constitutional law expert Professor Emeritus Datuk Dr Shad Saleem Faruqi said such an amendment would require buy-ins from all the states.
While the aspiration to redraw fiscal federalism in Malaysia was valid, he said, the state can request but they "cannot demand."
"The idea proposed here is to ensure a fairer distribution of the nation's wealth between the federal government and the states.
"However, individual states cannot unilaterally request changes," he added.
Shad said the Federal Constitution drawn up in 1957 did not adequately provide for fiscal federalism, which is an equitable sharing of wealth and tax revenues between the federal government and the states.
He said the constitution already includes provisions for revenue sharing for Sabah, where it is constitutionally entitled to 40 per cent of the taxes collected within the state.
"However, no similar provisions exist for Penang or other West Malaysian states."
Shad said Malaysian federalism has a very heavy central bias, and the request made by Chief Minister Chow Kon Yeow was still considered a proposal for reform, not a legal demand.
He added that the proposal can be achieved in one of two ways — by a new federal policy, or by a new law or a constitutional amendment which would require a two-third majority vote in the Dewan Rakyat.
"Most people will support a fairer sharing of revenue, but the constitution at present does not require a sharing of 20 per cent of tax revenue, though it does allocate other mandatory grants, such as the capitation grant and road grant, to the states.
"Also, any policy or legal reform must apply to all states, not just to Penang. The position of Sabah and Sarawak under our constitution is much more favourable," he added.
Earlier, Penang Chief Minister Chow Kon Yeow had said the state wanted the federal government to return 20 per cent of taxes collected from Penang so that the money can be used for various programmes and projects to further boost development in the state.
Answering a supplementary question from Gooi Hsiao-Leung (PKR-Bukit Tengah) during the state assembly sitting, Chow said if the state could get back 20 per cent of the taxes collected from Penang, this would mean an additional income of more than RM1 billion annually.