Asking mobile phone companies to defer service taxes for prepaid customers might complicate pricing issues in future.
NO doubt, many consumers are heaving a huge sigh of relief that mobile phone operators have agreed to defer yet again the 6% service tax for prepaid users which was supposed to have come into effect tomorrow.
But if you are a post-paid user, note that you will continue to pay the tax nevertheless although you, like me, will not understand why the prepaid customers are exempted while you have not been.
That is a reflection of the political and economic state of the nation where ad hoc rulings often overturn what has been set by the Government, in the process opening up a minefield of discretionary decisions that can lead to serious complications.
Worse, the government policies can again be viewed as flip-flops, agreeing to one thing at a time, then withdrawing it and, in the process, affecting the incomes of some large listed companies.
What all businesses need to operate under is some degree of certainty when it comes to government oversight so that the heavy hand of arbitrary discretion does not descend upon them and affect their operating conditions.
The issue of service tax for prepaid customers for mobile phone users can and should have been handled so that no industry or group of consumers is seen to receive more or less preferential treatment with respect to the imposition of service tax.[Continue reading]- Opinion by TheStar managing editor P. Gunasegaram