09 November, 2009


I refer to the recent proposed implementation of RM50 service tax on principal credit cards and RM25 service tax on supplementary cards as announced in the recent budget for year 2010.

I agree with the effort by the government under the leadership of Dato’ Seri Najib Tun Razak to implement measures to encourage prudent financial management by Malaysians and to curb excessive borrowings via multi credit cards.

Undoubtedly, there are many Malaysians which abuse credit cards as a source of borrowings. However, there are also many Malaysians who genuinely use credit cards for:-

1. Cost Savings Transactions
Such cost saving transactions includes purchase of goods & services via internet (e.g. purchase of airline tickets & hotel reservations, payment of phone, electricity and other utility charges, subscription of online news portal, purchase of computer peripherals, etc); and

2. Reduction of Carriage of Physical Cash
The reduction of carriage of physical cash by many Malaysian is due to security factor, including avoiding theft of the physical cash.

3. Providing Emergency Funds for Family Members
This includes issuance of supplementary credit cards to spouse and children when the principal card holder is not around, such as when the children are studying away from home and for actual emergency events (e.g. when one of the family members is hospitalized away from home).

As such, the efforts by government to encourage prudent financial management and curb excessive borrowings via multi credit cards should not be seen as giving negative impact towards the growth of the e-commerce industry in Malaysia and penalizing current genuine credit cards user who don’t actually intend to use the credit cards as a source of borrowings.

Thus, I would like to propose for the government to consider allowing:-

1. exemption of the payment of RM50 service tax for only one principal credit card for each Malaysian; and

2. exemption of the payment of RM25 service tax for supplementary card issued to spouse and children.