Flip-flop on GST on prepaid reloads shows Putrajaya bias towards telcos, says DAP

DAP national publicity chief Tony Pua slams Putrajaya for failing to resolve GST levy on mobile prepaid reloads a month after the consumption tax is being implemented, – The Malaysian Insider filepic, May 2, 2015.The cartel-like attempt by telco companies to stop absorbing taxes by passing them on to consumers as seen in the latest poser over the imposition of the goods and services tax (GST) for mobile prepaid reloads is nothing less than a profiteering exercise, DAP said today.

Previously, consumers paid RM9.43 for RM10 worth of mobile services value but today, without taking into consideration the taxes, consumers are forced to pay 6% more at RM10 to receive RM10 worth of mobile services value, the party's national publicity chief Tony Pua said.

He said that prime minister Datuk Seri Najib Razak had blamed price hikes on profiteering activities and urged the authorities to come down hard on profiteers and unscrupulous traders who manipulated GST for personal gains.

But Pua questioned why the authorities were only allowed to “come down hard” on ordinary traders, many of whom were forced to raise prices beyond the GST rate due to increase in the cost of doing business to comply with the implementation of the tax scheme.

"Why is it that the giant multi-billion ringgit telco companies, which were blatantly raising prices and profiteering from the GST implementation, treated with kid gloves?

"The prime minister must stop the unfair duplicity in government policies which favours the large corporations."

He said that last year, Maxis Communications, Digi Telecommunications and Celcom Axiata made pre-tax profits of RM2.44 billion, RM2.65 billion and RM3.1 billion respectively, adding that in total, they collected RM12.8 billion in prepaid mobile services revenue for the year.

Following the confusion over the tax issue for mobile reloads, Datuk Seri Najib Razak took to Twitter and Facebook yesterday to instruct Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek to personally handle the issue, which has seen consumers upset for being charged GST.

This after Shabery and Deputy Finance Minister Datuk Ahmad Maslan appeared to be at odds with each other over the price of mobile prepaid reload cards.

Since the rollout of the consumption tax on April 1, there has been confusion over the price of prepaid reloads with indications that it would go back to pre-GST rates from May 1, following outcry from consumers.

Ahmad tweeted two days ago that the April 3 Cabinet decision overrode any other decision on the prepaid mobile phone reloads issue, and that telcos should know about this.

His tweet included a link to an Utusan Online news article referring to the Cabinet's decision that there would be no price hike on reloads on prepaid cards despite being levied GST.

However, Shabery said that it was impossible for telcos to revert the price as of May 1 due to the need to reconfigure "many things".

Pua said today that based on Najib's tweet, it seemed that Shabery had won the fight on behalf of telco companies.

He added that this was a massive setback for the equitable implementation of the consumption tax and ordinary Malaysians.

"The excuse that the software systems were difficult to recalibrate, requiring more than a month to complete is nothing more than utter bunkum," he added.

Pua said that the Anti-Profiteering Act must be imposed equally and fairly on petty traders deemed unscrupulous for raising prices post-GST, as well as unscrupulous telecommunication companies, which trampled on the Act, despite making billions of ringgit in profits.

He added that the uproar arose because in the past, the telecommunication companies had absorbed the 6% sales tax (SST) on prepaid mobile services sales.

However, with the abolition of the sales tax and the imposition of GST, telco companies took advantage of the situation to pass the “new” tax to the customers, resulting in an immediate price hike of 6% for the consumers, said Pua.

"It is of course too much to expect the Najib administration to have resolved this issue before GST is implemented.

"However, it is stupefying how this matter hasn’t been resolved after more than 30 days."

- TMI