Thursday, May 14, 2015

GST Prepaid - What You Pay Is NOT What You Get

Datuk Seri Ahmad Shabery Cheek’s announcement that the mobile prepaid reload “reverts” to RM10 for RM10 credit with GST deducted only upon mobile usage proved that the BN Government and him are deceitful cheats

We read with complete disbelief that the Communications and Multimedia Minister, Datuk Seri Ahmad Shabery Cheek proudly announced that consumers who purchase an RM10 mobile prepaid reload will receive an RM10 credit upon activation. However, in the same breath, he said users will subsequently be taxed 6% GST on their usage.

The announcement is highly deceitful because users no longer receive RM10 of airtime for each RM10 purchase. Instead, they are effectively receiving only RM9.43 of call services for every RM10 paid. There is hence no difference at all from the controversial hike in mobile prepaid prices by the telecommunication companies on 1st April where consumers had to pay RM10.60 for RM10 of airtime.

This disappointing announcement comes after Datuk Seri Ahmad Shabery promised Malaysians on live television a week ago that “the rakyat want to purchase RM10 worth of prepaid credit, and they want to get airtime worth RM10. That’s what the people want… That’s why I have made the decision that if this is what the rakyat want, then that is my decision.”

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 1st April 2015, 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.

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?

The above decision makes a complete mockery of the Anti-Profiteering Act which sought to prevent businesses from raising prices unreasonably in conjunction with the implementation of the GST.

The Prime Minister, Datuk Seri Najib Razak blamed the GST burden currently experienced by the people on “profiteering activities” and demanded that the relevant authorities “come down hard on the profiteers and unscrupulous traders who manipulated the GST for their own extra financial gains”. Yet, when dealing with multi-billion ringgit telcos, the Najib administration turns a blind eye on these unscrupulous profiteers.

The prepaid mobile services price hike doesn’t only run afoul of the Anti-Profiteering Act, it also breaches the competition clauses of the Communication and Multimedia Act 1998. This is because all the telecommunication companies are raising prices by a uniform 6% at the very same time. It clearly reflects an anti-competitive and collusive practice.

Under Part IV (Economic Regulations), Chapter 2 (General Competition Practices) Clause 133, telecommunications operators are prohibited from “entering into collusive agreements”. It says that a licensee shall not enter into any understanding, agreement or arrangement, whether legally enforceable or not, which provides for rate fixing and market sharing, among other terms.

Therefore, we call upon the Minister stop being a cheat with his play of numbers and words. He must stop being deceitful to the Malaysian public by constantly twisting and turning his positions in order to support the multi-billion ringgit profits of the large telecommunication companies. The Najib administration must stop the duplicity of taking action against petty traders for alleged profiteering, while letting these big sharks get away scot free.

Tony Pua

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