Part 2 (Letter to Minister of Finance II) - EXEMPTION OF SERVICE TAX FOR ONE PRINCIPAL CREDIT CARD & SUPPLEMENTARY CARD ISSUED TO SPOUSE & CHILDREN

I refer to the soon to be implemented RM50 service tax on every principal credit cards and RM25 service tax on supplementary cards as announced in the budget for year 2010.

Prior to this letter, I have actually issued a request to your Ministry to consider exempting the payment of RM50 service tax for one principal credit card for each Malaysian and exemption of the payment of RM25 service tax for supplementary card issued to spouse and children. A copy of the request had been forwarded to your ministry on 9th November, 2009 via fax only.

However, to date, I have yet to receive any response on the said proposal. As such, I am rewriting this request officially to Dato’ Seri for your due consideration as the dateline for the implementation of the service tax is approaching.

Firstly, I agree with the effort by the government under the leadership of Dato’ Seri Najib Tun Razak and Dato’ Seri’s Ministry 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 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.

As the dateline for the implementation is just 3 weeks ahead, I hope that Dato’ Seri would be able to consider the aforesaid proposal at the soonest time.

I believe that any effort by the government to provide any relief to Malaysians to ease their financial burden would be greatly appreciated.

Thank you for your due consideration.