Saturday, September 10, 2011

Najib: Telcos must swallow the tax

Posted by admin on September 10th, 2011

Datuk Seri Najib Razak has called on telecommunication companies to rethink their move to impose a six per cent service tax on all prepaid sales, calling the levy “difficult to accept” given rising cost of living.The prime minister said the tax on all mobile prepaid starter pack and reloads had come at a time when the government was doing its best to reduce the burden after months of surging inflation.

“The reaction and feedback from the public is that the move by telcos… is unpopular and difficult to accept.

“So I hope that the telcos will review this move as we are trying to reduce the burden on the people who have to bear the rising cost of goods,” he told reporters this evening.

He also denied that the telcos have sought finance ministry approval as “the decision was made by the telcos themselves.”

The six per cent tax was announced yesterday in a joint statement by the telecommunication players, who insisted that it was not a new tax but had been absorbed by telcos since it was introduced in 1998.

But NGOs and politicians have criticised the increase given that telcos are recording billion-ringgit profits despite economic uncertainty hitting other sectors and the general public.

Inflation has remained at a two-year high of over three per cent since March as the Najib administration moved to slash subsidies to essential items such as fuel, electricity and sugar.

Putrajaya has insisted it was forced to make the cuts to a subsidy bill that would otherwise double to RM21 billion this year as it also seeks to rein in a budget deficit that ballooned to a two-decade high of seven per cent in 2009.

Federation of Malaysian Consumers Associations (Fomca) today demanded telecommunication companies rethink their move to impose a six per cent service tax on all prepaid sales, saying that such users were already paying higher rates than postpaid subscribers.

Fomca secretary-general Muhammad Sha’ani Abdullah said that consumers were currently “paying more” for prepaid mobile services, and that many were unaware call charges were based on “call-blocks”, usually in blocks of 30 seconds or more.

He said that if call charges were 30 sen per minute, each 30-second call-block attracts a charge of 15 sen even if not fully utilised. Some telcos use call-blocks of 60 seconds.

“Even though a call lasts for five seconds, 15 sen charges apply.

“That’s why telcos’ decision to stop this current practice is unwise because consumers are already paying extra charges for prepaid services and now it will be added with the additional six per cent service tax,” he said in a statement today.

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