Parliament: No service tax on credit cards please

KUALA LUMPUR: The DAP has called on the Government not to implement the proposed service tax on credit card holders, which will cause financial hardship to the poorer segments of society.

DAP secretary-general and Bagan Member of Parliament Lim Guan Eng criticised the move, proposed in the Budget 2010, which is RM50 on each principal credit and charge card and RM25 for supplementary cards.

The policy will push more consumers to borrow money from “ah long” or illegal moneylenders, especially when the country is facing the effects of the global economic slump, he added.

“The Government should look at the perspective of the poor first before it implements the move,” he said.

Lim said the party estimated that the Government will collect RM555mil in revenue from 10 million credit card and 1.5 million supplementary card holders per annum.

He added that the Government is expected to collect an additional RM6.3bil in net revenue for next year and questioned why it needed to tax RM555mil from the people.

“There are many lower middle class and working class people who have more than one credit card, and a number of them have three to four cards and up to six cards each.

“The interest rate for these cards can as high as 18% per annum or 1.5% per month, which is still lower than what is being charged by the ah longs.

“The move to tax the credit card holders will not achieve the Government’s aim on prudent spending, since the people’s income has gone down while their expenditure rate has not changed.

“The Government should cancel the credit card service tax, so that it can help the poor and the lower middle income group,” he told reporters at the Parliament lobby on Monday.

He said he was sure that the people understood how to plan their budgets during bad economic times.