Prime Minister Datuk Seri Anwar Ibrahim revealed today that nearly every state in Malaysia receives federal government spending that exceeds the amount of tax revenue they contribute to the national coffers, with the sole exceptions being Selangor and Penang.
Speaking during Prime Minister’s Question Time in the Dewan Rakyat, Anwar, who also serves as Finance Minister, provided official fiscal data to firmly refute recurring allegations from opposition leaders that certain states were being sidelined or economically starved by Putrajaya.
“Every state has received higher allocations than before and, in most cases, allocations exceeded the average tax revenue collected, with the exception of Selangor and Penang,” Anwar told the Parliament.
He explained that due to their highly advanced economic hubs and strategic industrial positioning, Selangor and Penang generate massive tax volumes, while federal operational and development spending within their borders remains comparatively lower.
To highlight the stark contrast between state tax collection and actual federal expenditure, the Prime Minister highlighted the audited figures averaged between 2023 and 2025:
- Selangor: Generated an average of RM43.6 billion in tax revenue annually but received RM15 billion in federal spending.
- Penang: Generated an average of RM10.7 billion in tax revenue but received RM7.9 billion in federal spending.
Anwar pointed out that the data completely dismantles the political narrative that the DAP-led Penang state government was receiving an unfair, disproportionate share of federal cash at the expense of others.
Conversely, Anwar demonstrated that states led by the opposition coalition Perikatan Nasional (PN)—specifically Kelantan, Kedah, Terengganu, and Perlis—are net beneficiaries, receiving immense fiscal injections far above what they contribute in taxes.
Between 2023 and 2025, the spending imbalance favored these states significantly:
- Kelantan: Contributed an average of just RM946 million in tax revenue but received a massive RM8.9 billion in federal expenditure.
- Kedah: Contributed RM3.7 billion in taxes while receiving RM9.5 billion from the federal government.
- Terengganu: Contributed RM1.2 billion in tax revenue (which rises to between RM2.2 billion and RM2.4 billion when accounting for oil revenue adjustments), yet benefited from RM7.8 billion in federal funding.
The Prime Minister stressed that federal funds are distributed equitably based on need, poverty alleviation initiatives, and critical infrastructure upgrades, rather than political alignment. He added that the Madani administration has actually increased the Ecological Fiscal Transfer (EFT) and capitation grants across the board for all states.
