Posts Tagged ‘service tax’

Demographics play a role in this prepaid service tax pushback

I tweeted yesterday: Why are prepaid users any different from postpaid users when it comes to GST? Demographics.

People are up in arms, and the youth division of the incumbent and opposition political parties seem to think this is bad. Postpaid users have been paying the 6% tax since 2011, thanks to Budget 2011 from the Najib government.

According to Bernama, telcos have been absorbing the tax for prepaid users since 1998. As all these telcos are public listed, why are the shareholders suffering? Keep in mind that several telcos are giving away 50-80% of profits in dividends for stockholders.

Skmm gov my link file facts figures stats pdf handphonesurvey05booklet pdfI figured it must be something to do with demographics. The latest study by SKMM is dated from 2005. Its a most interesting read. I’m willing to believe these stats don’t vary much in 2011…

  • Malays have 53.9% share of handphone users, followed by the Chinese at 32.4%, the Bumiputra (Sabah & Sarawak) at 6.5% and the Indians at 6.3%.
  • Prepaid subscribers are 80.4% of the demographics, with 19.6% being postpaid.
  • In 2005, ages 15-19: 11.5%, 20-24: 20.9%, 25-29: 16.2%.

Guess who’s voting in the next election? Guess who’s having the loudest voice? I see this as akin to having a tax for motor vehicles on the road, but not having one for the basic motorcycles.

Najib (“So I hope it can be reviewed to reduce the burden of the rakyat who are now facing hikes in food prices” via Malaysiakini)and Khairy suddenly cares for the rakyat. They want a complete GST implementation (to ensure that it “broadens the government’s revenue base”) but for your non-essential mobile phone, they want it to be GST-free? Tsk tsk.

Quick Update: DiGi’s annual report 2010 states that 7.3 million subscribers are prepaid users, with only 1.4 million postpaid users. Maxis annual report 2010 states that there are 10.69 million prepaid users versus 2.67 million postpaid users. Interesting ratios, but since they’re not the government, they don’t give you racial demographics :-)