6% Service Tax Suspension: Government Should Go All The Way To Exempt Prepaid From Service Tax

While I welcome the latest decision to suspend the price hike of prepaid charges due to the 6% service tax as announced by telecommunication companies, this must be viewed cautiously by the public. Does this mean the price hike will be delayed until after the general election as presumably instructed by the Prime Minister?

I also maintain that the way Dato’ Seri Najib Tun Razak has managed the situation sends a very negative signal to the business community. Many other businesses which are currently charging the 6% service tax to consumers now must be getting worried that they will be the next to get a telephone call from the Prime Minister’s Office asking them to absorb the service tax.

Dato’ Seri Najib Tun Razak could have improved his image permanently if he had the courage to announce the exemption of prepaid telecommunication services used by the majority of lower income group and young people from the 6% service tax. This would have effected a permanent lowering of telecommunications charges and go a long way to reduce the escalating cost of living.

Without the 6% service tax, telecommunication companies have no other option but to lower the tariff for prepaid customers, since their prepaid costing structure at the present must have factored in the service tax.

The Prime Minister does not have to wait for an elaborate and expensive laboratory managed by PEMANDU to help lowering the cost of living of the people. He just need a little bit of common sense and he can start showing he has the common sense by exempting prepaid customers from the service tax.

The suspension of the price hike is yet another demonstration of the real power wielded by the public when there is a check and balance in the country. Pakatan Rakyat’s strong presence in Dewan Rakyat has persistently held up the right of the public to pressure the government to reverse unpopular and wrong policies over the last three years since 2008.

MOHD RAFIZI RAMLI

DIRECTOR OF STRATEGIES

12 SEPTEMBER 2011

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