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‘Tax on telecom services in Pakistan highest in the region’ - LRE - 08-05-2008 03:37 PM
‘Tax on telecom services in Pakistan highest in the region’
Staff Report
ISLAMABAD: Pakistani mobile phone users are paying the highest taxes on the use of telecommunication services in the region, reveals a recently published report covering the SAARC countries. Pakistani consumers are paying 33 percent taxes whereas Indian consumers are paying 12.40 percent.
According to the report, tax ratio is 15 percent in Bangladesh, 17.50 percent in Sri Lanka and 23 percent in Nepal.
Local traders, Muhammad Ashraf, Abdul Qadeer, Waqas and Rehan told this scribe that 33 percent tax on a hundred rupees card is “sheer injustice.”
Housewives Yasmeen, Zubaida and Zahida were of the opinion that they could not afford everyday increase in transport fare and were unable to meet relatives in the same city. In such situation, they said, mobile phones were the only means of regular communication but increase in government taxes has made it expensive for them. They have appealed to the Prime Minister Syed Yousuf Raza Gillani to reduce taxes in order to give the common man some relief.
The increase in federal excise duty on telecommunication services from 15 percent to 21 percent has adversely impacted the usage of mobile phone services and it is feared that increase in duty will result in decrease in usage by 8 percent to 9 percent within the current fiscal year.
Unfair taxation would lead to burdening the new potential rural consumers who do not have access to mobile phone facility, hampering the development of the rural economy.
The growth in the telecommunication sector during last 4 years was recorded 100 percent due to its expanding consumer base. However, the burden of taxes and duties is going to reduce the usage by the consumers resulting in fewer revenues for the government and reduced operations by the companies.
Increase in taxes and duties on telecommunication services in the budget for the current fiscal year 2008-09 would have negative impact in attracting fresh foreign direct investment in telecommunication sector and overall economic growth of the economy, says analyst.
According to the mobile phone industry experts, the telecom sector, which has already tapped the urban market of the country, was planning to invest heavily in their infrastructure to expand their services in remote and far-flung areas.
At present mobile phone companies have already sold 80 million connections to the consumers but the actual numbers of live consumers stands at 50 million. The companies were aiming at increasing their consumer base to at least 100 million by expanding their services in remote and far-flung areas of the country.
“But the sudden shift in fiscal policy for the telecommunication services has threatened the expansion plans of the mobile phone companies,” they lamented.
According to the telecom experts, the result of this additional tax, contrary to the aim of government, will result in reduced usage and expansion of the service resulting in lesser revenues.
Growth in mobile phone sector have also provided good basis to the economy to grow in the last 4 to 5 years and this sector was required to continue growth pattern to serve the rural population. “Other options like taxing stock market or direct taxation of rich should have been looked into as compared to burdening the existing taxpayers or consumers,” they added.
http://www.dailytimes.com.pk/default.asp?page=2008%5C08%5C05%5Cstory_5-8-2008_pg5_25