Sunday, May 24, 2015

An Easy Way Out - PM Shifts Blame of GST-Hiked Prices on Traders

Dato’ Seri Najib Razak should stop being a hypocrite blaming petty traders for unscrupulously raising prices when his administration backed the single biggest profiteering exercise by the mobile telecommunication companies.

Bernama reported yesterday that Dato’ Seri Najib Razak blamed “the action of some traders who exploited the goods and services tax (GST) has burdened the people when the tax system was implemented last April 1”.

He said the traders should have reduced prices after the sales and services tax (SST) was abolished but they did not do so and instead took the opportunity to raise prices by 6% using GST as an excuse. He said,

"The GST issue is caused by traders, these traders are evil, they are not responsible, not the government, we have other policies. When traders exploit the situation, the people blame the government and prime minister."

"We have abolished SST of 10%, 5%, some people do not know about SST before, the problem (abolition) is, it should have reduced prices but another 6% is added, this is the cause."

"If want to be angry, get angry with the traders, they must be blamed because they do not have compassion to think about the people's interest."

The Prime Minister is being a complete hypocrite by shifting the entire blame of the substantial price hikes after the implementation of the GST on the traders, and traders only.

Pakatan Rakyat has repeatedly warned prior to the implementation of the GST that the BN administration was living in cuckoo-land to actually believe that the prices will fall post-GST. Then, the Finance Ministers and their deputies continued to dismiss the simple established economic fact that “price are sticky downwards”. Any Economics student would have been able to educate these Ministers on the simple dictum.

However, the Najib administration has believed that they could defy gravity and chose to proceed with the implementation of the GST. Dato’ Seri Najib Razak even had the audacity to claim in is 2015 Budget Speech that

"Of the 944 goods and services in the basket of goods of the CPI, the prices of 532 items or 56% are expected to reduce up to 4.1%... Meanwhile, about 354 goods and services may experience some price increase but less than 5.8%."

It is hence no surprise that the Prime Minister, who is also the Finance Minister, looks like a complete fool today.

What is even more galling is the sheer hypocrisy of the attempt to shift the blame on the petty traders when it is his administration which is endorsing the single biggest profiteering exercise by the multi-billion ringgit telecommunications industry.

On Tuesday last week, the Communications and Multimedia Minister, Datuk Seri Ahmad Shabery Cheek repeated his defence in Parliament for these companies to raise tariffs by 6% with the switch from the SST to GST.

Prepaid mobile users no longer receive RM10 of airtime for each RM10 purchase despite a 6% SST being imposed. Instead today, they will enjoy only RM9.43 of call services for every RM10 paid after the switch to the 6% GST.

The Minister isn’t only supporting a industry-wide profiteering exercise, he is endorsing their anti-competitive behaviour as these companies colluded to implement a uniform and concurrent 6% price hike.

Hence the Najib government has betrayed the rakyat’s interest in favour of even more profit for the already highly profitable telecommunication companies. Last year, 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 BN Government helping these highly profitable companies make an additional estimated RM770 million in profits? These numbers doesn’t even include the multi-million ringgit revenue and profits made by other mobile virtual network operators (MVNO) in the country like U-Mobile, Tune Talk and XOX.

While the Ministry of Domestic Trade attempts to punish the restaurants raising the prices of roti canai by 30 sen, the Najib Government embraces the RM770 million windfall profits for the mobile telcos. There can be no bigger unscrupulous profiteering exercise in the country today as a result of the GST implementation and Dato’ Seri Najib Razak chooses to be a blatant hypocrite to fully endorse the burden to be placed on the man-on-the-street.

Tony Pua

No comments: