GST announcement on mobile prepaid receives heavy criticisms

PETALING JAYA: The recent announcement by the Communications and Multimedia Ministry that the Goods and Services Tax (GST) will be charged based on prepaid mobile consumers' usage has drawn strong criticisms from numerous quarters.
Malaysian Muslim Consumers' Association (PPIM) head activist Datuk Nadzim Johan said the statement by the ministry was vague, unclear and ambiguous as it does not help address the main issue relating to GST charges for mobile pre-paids.
"Most consumers especially the lower income groups find it difficult to understand how GST will be charged for pre-paid mobiles especially whether they should continue paying RM10.60 for a RM10 talk time credit until next year or they should just pay RM10 for RM10 mobile credit," he said when contacted.
He added that even his organisation had difficulties understanding the statement and explaining it to their complainants as each of them (complainant) had their own interpretation on the statement issued.
On Wednesday, Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek announced that prepaid mobile consumers will be charged GST when they make calls, SMS, go online or download an application.
Ahmad Shabery added that his ministry had given telcos up to six months to adjust their mechanisms and software to effect the usage-based GST policy for prepaid consumption.
Commenting on the time frame, Nadzim said the time given was slightly long and was inconvenient for consumers.
"The time frame given seems to be too convenient for the telcos and this is something the ministry should not do because it will make you look like you are protecting the telcos' interest at the expense of the consumers," he added.
Nadzim then proposed that it will be reassuring if there are no GST charges at all for mobile prepaid users whereby when you purchase RM10 credit reloads, you will eventually get RM10 of talk time instead of RM9.40.
At the same time, the Federation of Malaysian Consumer Association (Fomca) secretary-general Datuk Paul Selvaraj said that the GST charges for mobile prepaid users should be absorbed by the government instead.
"Let a RM10 top-up card be RM10 (in value)," he said.
Paul told theSun that the government should be looking into lessening the consumer's burden because most of the people who are using pre-paid cards are from the lower income group.
Meanwhile, DAP National Publicity Secretary Tony Pua slammed the government for being 'deceitful cheats' in its recent mobile prepaid's GST announcement.
Pointing out that Ahmad Shabery's statement on Wednesday was different from what he had said on live television a week ago, Pua said this would mean there is no difference from the controversial hike in mobile pre-paid prices by the telcos on April 1 where consumers had to pay RM10.60 for RM10 of air-time.
"It also means that the Minister has betrayed the rakyat's interest in favour of even more profit for the already highly profitable telecommunication companies.
"Prior to April 1, users received RM10 of airtime for every RM10 spent, as every telcos absorbed the then 6% service tax. By using the switch from a 6% service tax to the 6% GST as a ruse, the Minister is supporting the collusion by the telecommunication companies for a uniform 6% price hike," the Petaling Jaya Utara MP said this in a statement.
Pua also pointed out that despite absorbing the 6% service tax, Maxis Communications, Digi Telecommunications and Celcom Axiata made pre-tax profits of RM2.44 billion, RM2.65 billion and RM3.1 billion respectively in 2014.
"In total, they collected RM12.8 billion in prepaid mobile services revenue for the year. Why is the Government helping these highly profitable companies make an additional estimated RM770 million in profits?" he asked.