Wednesday, January 20, 2010

Credit Cards, The People-Unfriendly Budget and Something Funny

"They really need the money" so said fellow blogger and the informant of all things financial, Zewt. And although it makes sense to a certain extent (you need money to run a country, naturally) the whole thing seems a bit unfair... as though you're being punished. At least that's the way I feel...

It's been awhile since the budget was announced (I wasn't exactly in the country then, and after that I got a tad bit too busy to review it) and there was one thing among a few that people were generally unhappy about. However, despite the numerous complaint letters sent to the papers (mainstream media, alas - sniggers), they had not backed down from the decision to charge every credit card holder a service tax of RM 50 for each principle credit card they have (not necessarily used)

The thing about credit cards is that they're convenient... especially for people who don't fancy carrying around cash. If you look at it, RM 50 may not seem like a huge amount, and it probably isn't for some people, but when it is taken away from you under the pretext of tax - especially service tax, you feel deep pain and intense hatred. It's just like paying the service tax at this certain restaurant my sister and I went to once where people (us included) had to end up doing lots of self-service because the waiters and waitresses there were not providing any.

What's really annoying is the 'reason' behind it... I read somewhere that they thought the imposed fee would deter people from having too many cards and thus reduce the chances of declaring bankruptcy at a young age. Yeah, right. Certain quarters argued that the banks could increase the interest rates for credit cards so that it wouldn't be misused, but even that suggestion was not accepted as it supposedly would push the credit card users into further debt.

With nothing else left to do, and most banks refusing to absorb the service tax, people have been cancelling their cards. If you're Malaysian, you'd understand the humour behind the attachment below... If you're not Malaysian, the person used as a referral (the reason for cancellation) in the application form happens to be the person who tabled the budget back in October, who is also the Finance Minister and our current PM!

Edit: According to insider information from Zewt, the banks were asked to not absorb the service tax. I find that very, very interesting... Hmmm...

Click to enlarge


  1. I'm not entirely sure I understand this, but then I'm one of those odd people who don't carry a credit card debt. I use a credit card purely for convenience and pay it in full every year. SO I don't think i'd much like to be taxed in it.

  2. the worst thing is KOLA is going to vanish in our salary! :(


  3. SAW: I'm the same... I pay up all my credit card bills on time, hence why I think the service tax sucks. The banks are sure gonna suffer. No one in their right mind will have more than 3 or 4 cards now.

    Faisal: I didn't know that - I don't think we have KOLA where I work, though...

  4. Why would someone need more than one credit card? That seems really strange to me. If you need a card for your living expenses, you need to reassess your finances, big time.

    We're taxed per card too. It's purely a fund-raising exercise by governments, it does nothing to reduce credit card debt. Someone who is in debt to a credit card, or who thinks credit card debt is necessary to live month-to-month, is not going to change their ways because of another charge or higher interest rates.

  5. I see your point, and I do believe that the service tax is to increase the country's coffers, even here... The debt issue and all are stuff I picked up from the papers as there have been debates going on. There are people out there who have multiple cards to increase their credit limit... it is crazy indeed. And if I'm not mistaken, we do have many people declaring bankruptcy due to debt. But yeah, if they are living on credit, I doubt anything will deter them from utilising all their credit cards.

    The thing is, I believe people are resisting change... in the sense that we never had to pay for tax for credit cards before, and the ruling govt is also in many people's bad books at the moment.

  6. I think it's great that people are resisting this unfair tax. Go Malaysia! :)

  7. Hahahahahaha! Ask Najib why, that is a good one la!

    I've decided to carry around a debit card instead these days. At least they don't charge you that RM50.00 for it and I only use what I have in my card ...

  8. Hoozle: We lost :(

    Nick: I know... it was his idea, anyway. A debit card sounds like a good option... might want to try getting one, too.

  9. well, it's not entirely correct to say banks refuse to absord. it's more like, banks were warned against absorbing it.

    if ensuring the young will not abuse credit cards and fall into bankruptcy, the solution is very simple. just ask bank negara to impose a credit cards application requirement (e.g. annual salary of XXX) before credit cards can be approved, and then penalised those banks that breach this condition. all will be solved.

    taking 50 bucks is just an excuse, not a reason. everyone in the industry know that.

  10. Oh, thanks for the info on why banks are not absorbing the service tax. I should correct the post then.

    You know, they always say you gotta give people the benefit of the doubt... but I'm thinking that if a person lives on credit, then no matter how much tax they have to pay, they will still try their best to keep as many credit cards they possibly can, or like what my sis suggested, they'd probably borrow money from elsewhere.... (loan sharks, maybe?)

  11. yeah, consider that an insider info :P

    as for credit, it's a lifestyle that has embedded into us. the root goes beyond this country. the root stems from the western culture in trying to milk the consumerism that is in us to boost the so called global economy.

    do you know, without credit, the whole world will collapsed. ok, i have digressed.

  12. Credit cards = pure evil. Let them cancel all their cards. They aren't worth it. I hate them.

  13. zewt: yeah, without credit the whole world would have collapsed. Without credit, I'd be without a job, LOL.

    Ricardo: Lots of people would agree with you... about credit cards being evil.


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