The Federal Government should not be earning from the middle and lower income groups

The Federal Government should not be earning from the middle and lower income groups RM 555 millions annually from the RM50 & RM 25 service tax on each credit/charge card and supplementary card perpetually.

DAP reiterates its opposition to the BN government’s 2010 Budget proposals to impose the RM 50 and RM25 service tax on each credit/charge card and supplementary card respectively. This credit card service tax proposals would earn the Federal Government RM 555 millions annually which would impact more on the middle and lower income groups.

Prime Minister Dato Seri Utama Najib Tun Razak claimed that the people should look at the overall benefits of the 2010 Budget and not just at the service tax on credit card. The Prime Minister is wrong as the benefits of reducing the maximum tax rate of 27% to 26% and a RM 1,000 increase in tax reliefs from RM 8,000 to RM 9,000 would only benefit the wealthy and upper middle class.

BN leaders should look at the service tax from the perspective of the poor and not from their own comfortable lifestyle! Does BN know how the poor makes ends meet by rolling over their expenses through using credit cards? By increasing the service tax on credit cards, the ones most affected and paying the RM 555 million extra revenue earned from imposing service tax will be on the lower and middle income group.

The 2010 budget is supposed to benefit all Malaysians with tax deductions, tax reliefs and tax benefits. These should have reduced government revenue instead of increasing revenue by RM 6.5 billion. An extra RM 555 million is small compared to the RM 6.5 billion increase in revenue from RM 148.5 billion to RM 154.8 billion for 2010. BN government should abolish the service tax for credit cards to prove its credentials as a people centric government.

2 thoughts on “The Federal Government should not be earning from the middle and lower income groups”

  1. Does Najib think that by a “RM1,000 tax relief” that people will actually be getting RM1,000 more in their pockets?
    And that everyone would benefit from a reduction of tax of the 27% bracket to 26%?

    A single man who earns RM28,000p.a., would have tax relief of RM8,000, making his chargeable income RM20,000.
    Under Tax Rates of Year 2009, he would have to pay tax of RM475 on the RM20,000.
    With an increased tax relief of RM1,000, his chargeable income is lowered, but only at RM19,000. His tax on the RM19,000 be thus reduced, but only to RM445.
    This is only a reduction in tax of RM30!

    In fact, with the RM50 service tax per credit card, he’d be poorer by RM20!

  2. Dear YB,

    i not always here…but i come here to your blog is to specially express my thanks for your raised issue on the credit card tax…Indeed this issue has greatly effected our life and putting the burden to us people.

    Hope DAP will continue fight for us in this matter, i am sure this is a cry that many cards holder out there. because in today time, many people use credit cards for many reason included to save money for better management on spending or for discount or rebate, this tax will make us lost or cancel lot of card that normally can help us do that.

    the bank now still do not have decision yet, imaging what if government insist or end up the bank absorb this RM50 but comes with spending condition, this will make LOT of citizen in trouble or force them to spend more or even more debts, plus it is UNFAIR to tax us each cards that we have, many family or student also effected.

    thank you again.

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