THE imposition of a six per cent service tax on all telcos prepaid reloads and starter packs from next Thursday (Sept 15) has not only drawn flak from the public but also a call from the Prime Minister to the telecommunication companies to reconsider their decision.
Handphone users, who have increased ten-fold nationwide, are flashing the thumbs-down to the extra charge for a prepaid mobile reload.
They argue — not without good reasons — that with the service tax, a RM10 reload will cost RM10.60, a RM15 prepaid reload (RM15.90) and a RM30 reload (RM31.80). These new charges, they point out, will a big burden, especially to low wage earners.
Students who probably make up the most handphone users in the country, bemoan the extra money they have to cough up to pay for their monthly mobile reloads.
Most of them say they are already struggling to meet their monthly mobile phone charges without the additional six per cent service tax, and their burden will increase even more with the new regulation.
Their contention is not without merits, considering the mobile phone has become a very important, if not indispensable, part of people’s lives. Indeed, going without a mobile phone nowadays is unthinkable — and certainly no longer an option.
Prime Minister Datuk Seri Najib Tun Razak has called on the telecommunication companies to give their decision a second look, saying the six per cent service tax imposed on prepaid mobile phone users each time they reloaded or bought a starter pack would be a heavy load for them to shoulder.
He said the imposition of the service tax was decided solely by the telcos themselves as the government had no part in the decision-making.
Najib pointed out that feedback from consumers indicated conclusively that the move is not a popular one.
“The main focus now should be on reducing the burden of the rakyat and not about decisions to increase their burden,” the Prime Minister stressed.
Santubong MP Datuk Wan Junaidi Tuanku Jaafar has described the move as unfair.
He said while the well-to-do might not feel the pinch, the low income group, and students, in particular, would be hard hit.
He urged the government, especially the Information, Communication and Culture Ministry, to advise the telcos to make what he called “a little public social contribution” instead of making life hard for the people.
While admitting that some telcos had made substantial investments on telecommunication infrastructure in the country, he noted that their returns had also more than quadrupled in recent years.
“Don’t rob the poor to give the rich,” he stressed.
Junaidi, who is Deputy Parliament Speaker, said he would bring the matter up to the Prime Minister during a parliamentary pre-council meeting next month.
Most people feel the telcos should continue absorbing the six per cent service tax since the big telecommunication companies have turned in huge profits of over a billion ringgit. As such, they contend, there is no reason to charge prepaid phone users any extra.
Weighing in on the issue, Batu Lintang assemblyman See Chee How said the transfer of the service tax by the telcos to consumers is neither wise nor reasonable, given their colossal returns.
The telecommunication companies had earlier explained the service tax was not something new and they had been absorbing the tax — which they claim is a consumption tax and chargeable to the consumer — since the introduction of pre-paid mobile service in 1998.
In a joint statement on Thursday, the companies referred to a provision (for service tax) under the Service Tax Act 1975 at the prevailing rate on telecommunication services, including mobile prepaid services.
As things stand, all telco starter packs and reloads, regardless of channel, will be charged a service tax at the point of sales from Sept 15 nationwide, except tax free havens such as the islands of Labuan, Langkawi and Tioman.
It is also to be noted that from that date, reloads via Automatic Teller Machines (ATM), Cash Deposit Machines, Internet Banking and Electronic Payment Kiosks will not be available until further notice.
The new charges could spark an exodus of prepaid subscribers to postpaid. An educated guess perhaps but nonetheless, one that holds water because ultimately, it’s the consumers who have the final say. They can always look elsewhere if they feel they are being short-changed.
However, the big snag here is that the telcos have a monopoly of the business, leaving consumers with limited choices.
Any government initiative to overturn the telcos decision will, thus, serve not only to prevent unfair price hikes but also lighten the financial burden of the Malaysian public.