This article first appeared in The Edge Financial Daily on January 23, 2019

KUALA LUMPUR: Finance Minister Lim Guan Eng has rebutted claims that the record RM137 billion in tax collected by the government last year was solely due to an increase in oil prices, saying a significant chunk was contributed by other sources.

“While the increase in oil prices accounted for about 60% of the rise in tax collection, the balance 40% was contributed by other factors,” he told a press conference yesterday to announce an upcoming Chinese New Year Open House 2019 event which will be jointly hosted by himself and the National Chamber of Commerce and Industry of Malaysia on Feb 6.

The 2018 direct tax collection was 11.13% or RM13.723 billion more than the RM123.312 billion collected in 2017.

Guan Eng further clarified that RM8.3 billion of the increase was contributed by higher petroleum-related collections while another RM5.4 billion came from other revenue sources.

“So it’s not entirely due to the rise in oil prices,” he said.

Guan Eng was commenting on claims that the tax collection was propped up by the rise in oil prices last year and that the higher collection was based on taxes paid in 2017, reflecting the efforts of the previous Barisan Nasional administration.

He also pointed out that the tax system was changed about two decades ago, and tax payments in Malaysia are no longer based on the previous year’s assessment.