Move by telcos to impose 6% tax on prepaid lines comes under fire

STAR, 10 September 2011

KUALA LUMPUR: Calling it difficult to accept, the Prime Minister has joined in the chorus of people against the move by telcos to impose 6% service tax on prepaid mobile phone users.

Datuk Seri Najib Tun Razak said the move comes at a time when the Government was trying to ease the burden of the rakyat’s who are already hit by the rise in living costs.

He added the move was not approved by the Finance Ministry as the decision to impose taxes was taken by the telcos themselves.

“I have received many reactions and feedback from the people,” he told reporters yesterday after launching Maybank’s new corporate logo.

“The move to impose the service tax on consumers is very unpopular and difficult to accept.”

MCA Youth chief Datuk Dr Wee Ka Siong said the service tax was a huge burden to the people.He added mobile phones were an essential item to consumers and played a major role in the daily life with most of the prepaid users coming from the lower-income group.

It was reported that from Sept 15 onwards, prepaid users and those purchasing starter kits would need to pay an extra 6% as telcos agreed they would no longer absorb the service tax, which was introduced in 1998.
Umno Youth chief Khairy Jamaluddin described the decision as “unreasonable”.

“Boss @NajibRazak, the decision to impose tax on prepaid users is unreasonable and it would burden the rakyat. I oppose it. Please review it,” he tweeted.

PKR vice-president Tian Chua said the Government must intervene immediately to help low-income earners.
He also noted that prepaid plans were unfair to users by design as users paid for their usage up front.

Consumer groups were also up in arms over the increase, which they have lambasted as unfair.

Consumers Association of Penang president S.M. Mohamed Idris called on the Malaysian Communications and Multimedia Commission to stall the move.

He added mobile phone prepaid users faced the brunt of unfair terms and conditions imposed on them, especially when the balance in their account was forfeited when they did not reload within the validity period.

He suggested that a prepaid number should have lifetime validity and be activated at the customers convenience.

Muslim Consumers Association Malaysia activist Datuk Nadzim Johan said the increase was unfair and ill-timed when consumers were tightening their belts over the increasing cost of other essential goods.

Fomca secretary-general Muhammad Sha’ani Abdullah said the telcos were already pocketing extra from their customers with their “call block” formula.

“If a telco charges RM0.30 per minute with 30 seconds per block, this means that you pay RM0.15 whether you use the phone for only 10 seconds or 30 seconds,” he said.

“This means the telcos are already making money from the unused seconds. Consumers have already been over-paying for years.”