Prime Minister Anwar Ibrahim says only Selangor and Penang contribute more in tax revenue than they receive, with federal allocations based on development needs.
KUALA LUMPUR: Almost every state receives more in federal allocations than the tax revenue collected from it, with only Selangor and Penang being exceptions, Prime Minister Datuk Seri Anwar Ibrahim told the Dewan Rakyat today.
He said federal allocations are distributed according to development needs rather than the amount of tax revenue generated by individual states, particularly for infrastructure, flood mitigation, poverty eradication and other critical projects.
“All states have received higher allocations than before, and higher allocations compared with the average tax revenue collected, except Selangor and Penang.
“Selangor and Penang, because of their strategic positions, generate high revenue, but federal development expenditure there is lower by comparison,” he said.
Anwar was responding to a question from Datuk Seri Doris Sophia Brodi (GPS–Sri Aman) on claims that federal allocations to state governments were unfair and insufficient compared with the revenue collected from those states.
He said Selangor generated an average of RM43.6 billion in tax revenue between 2023 and 2025, while federal expenditure in the state during the same period totalled RM15 billion.
For Penang, the Federal Government collected an average of RM10.7 billion in revenue from 2023 to 2025, compared with RM7.9 billion in federal expenditure.
Anwar said the situation differed significantly in several other states, where federal spending substantially exceeded revenue collected.
“For Kelantan, the average revenue collected from 2023 to 2025 was RM946 million. I hope Kelantan MPs will note this, because federal expenditure for Kelantan from 2023 to 2025 was RM8.9 billion.
“For Kedah, the average revenue collected from 2023 to 2025 was RM3.7 billion, while federal expenditure was RM9.5 billion,” he said.
He added that Terengganu contributed RM1.2 billion in tax revenue and another RM1.2 billion in petroleum-related revenue, bringing the total returned to the Federal Government to RM2.4 billion.
Federal expenditure in Terengganu over the same period amounted to RM7.8 billion, he said.
Perlis generated RM419 million in revenue but received RM2.2 billion in federal expenditure, while Johor contributed approximately RM14 billion in revenue and received RM16 billion in federal spending.
Anwar said the larger allocations reflected pressing development needs, including flood mitigation projects, highway upgrades, the Pan Borneo Highway in Sabah and Sarawak, drainage improvements, interchanges, public infrastructure, schools and assistance for poor and marginalised communities.
He added that the government had also increased state allocations through mechanisms such as the Ecological Fiscal Transfer and higher capitation grants.
“It is completely untrue to claim that certain states have been neglected or sidelined.
“If we want to compare, I want to stress here that it is the Madani government that has given the highest allocations to states such as Kedah, Terengganu and Kelantan compared with before.
“I hope this explanation will help dispel baseless accusations and slander,” he said.
