The opposition government raised concerns over the high taxes levied on mobile users in Pakistan. The cellular companies have been charging extra charges to their customer which directly influences the telecom usage in the still developing country.
It is critical for the government to realize that the mobile is a necessity not a luxury. More than 70% of the population belong the Low-income group and such high taxes and charges discourage advancement for a brighter future. The government has levied charges of upto 30% of every recharge and a charge of PKR 0.15 is made every time a person places a call even on fixed call rate.
A proposition is made to place the tax on expensive mobile purchases. Which in turn could help the middle class, however, the idea itself can create other problems. A higher tax on the mobile phone itself reduces consumerism. One effect that be easily pointed out is the advantages of 3G/4G service which has increased the signing up of people on Mobile E Banking. This has helped the government account for undocumented Economy of Pakistan. In April 2016, Pakistan Telecommunication Authority (PTA) estimates that a good 29 Million people use mobile internet subscription which increases due to the 1 million new smartphone users adding the market every month.
We would like to think that a downward rationalization of taxes would have increase demand and thus the government’s revenue would remain unchanged.
To make matters worse the 2016 budget increased the taxes on high end phones by almost a 100% to Rs 500 and Rs 1000. A good news to note here is that the taxes on purchase of a small mobile is unchaged at Rs 300.
We hope to see the government not pushing telecom out of business while it discourages customers to use their mobile at full extent.