Service Tax on Credit Card - Good or Bad

Written by Dilemma

It was announce in the Budget 2010 that for every credit card we hold we will be charged a service tax. This is to help create a self control finance community. It is for the good of the budget and country.

To be fair, it is not a bad idea. But has the government really consider it in deeply.

If I am one of those who owed bank thousand of RM and paying the minimum amount monthly. Do you think when you impose a service tax, I will cancel my card and be more prudent in spending? How can I afford to pay back to the bank in the first place.

What really happens is the poor fellow struggling to pay the minimum payment now has to pay to the government a service tax. It is like "Add Fuel To The Fire" or "Add Salt to Wound", making it more worse.

And what about those who are good paymaster. They are prudent enough paying off their debt monthly, the service tax will just be an additional cost. Well, this guys can cancel their cards in order to save RM50 per cards. But if they want to have the convenience of being cashless they can choose to keep one card. But remember it will still be charge RM50.

Some may have just apply for one, some bank has condition. You must not cancel within certain period to enjoy annual fee waiver. Then this fellow is in dilemma - pay the government or the bank. I guess pay the lowest.

Well, perhaps our government want us to start use Debit card instead of Credit card. Debit card surely is good as if you do not have the money. You cannot spend.

But sometime you just need the Credit immediately. Example when your love ones are hospitalized into private hospital and does not have a health insurance. And you are not able to get relatives and friends to borrow you immediately. Credit card can gave an instant credit whereas Debit card limit to your accounts cash.

Next, when all Malaysian start cancelling their credit card, what will happens. The bank loses customers as it has less credit card holder except those poor paymaster. The merchant and consumer loses promotion or discount that come with credit cards. Less is spent, thus slow down economic recovery (maybe no so serious).

Last but not least, those credit card agent loses their job - what to push for new cards. I guess I do not get free gift that much often.

So is it Good or Bad imposing the Service Tax?