DAP urges withdrawal of credit card tax

KUALA LUMPUR: DAP has urged the federal government to withdraw its Budget 2010 proposal to impose service tax on credit cards and charge cards as there is already adequate revenue for next year.

Its secretary-general Lim Guan Eng said the 2010 federal government revenue estimates showed it would have a net revenue gain of RM6.32 billion after taking into account tax changes proposed under the latest budget, adding that revenue involving the collection of income tax alone would amount to RM5.04 billion.

Lim said the government was expected to collect additional revenue of about RM555 million annually from the service tax on credit cards and charge cards, but should take into account that many employees only had minimal increases and marginal bonuses caused by the global financial crisis.

“If the service tax is on consumers then you will be taking RM555 million from the pockets of Malaysians. Those that will be severely affected will be basically from the lower income groups,” Lim told a press conference at the parliament lobby today.

Effective next year, the government will implement an annual service tax of RM50 on each principal credit card and charge card and RM25 for each supplementary card. The service tax is also imposed on cards that are issued for free.

Bank Negara Malaysia's statistics showed that there are about 9.8 million principal cards and some 1.3 million supplementary cards issued at the moment.

Lim pointed out that the spending and expenditure habits of Malaysians have not changed, and it was normal for average Malaysians to have three to four credit cards, stressing that the maximum 18% interest on credit card charges imposed by banks were much lower from loan sharks.

Lim, who is also chief minister of Penang, said that there would be virtually no impact on consumers should the service tax on credit cards and charge cards be absorbed by the banks instead, but remained sceptical if the institutions were willing to do so.-The Edge