Traders say higher levies discouraging consumers and companies. PHOTO: FILE
Traders say the increasing taxes on the telecom sector are discouraging consumers and companies from using the services and this will ultimately prove detrimental to the national productivity.
In a statement, Islamabad Chamber of Small Traders Patron Shahid Rasheed Butt, while quoting a study, said a 1% price increase led to a decrease in consumption of ICT goods and services in the range of 0.2% to 3.8%.
According to the World Bank, he said, every 10% penetration of broadband contributes 1.38% to the gross domestic product but that was ignored in Pakistan where the telecom industry was reeling from the burden of taxes.
“Pakistan’s telecom sector is the second highest taxed in the world which discourages investors, resulting in lower third generation and fourth generation penetration, not to mention a dramatic drop in foreign direct investment.”
The foreign investment, Butt pointed out, plummeted 72% in the fiscal year ended June 30, 2015 while the telecom industry contributed 50% less in taxes compared to the previous year.
“The biometric verification drive for mobile phone subscribers resulted in overall connections dropping by 18% and its cost to the telecom industry stood at $60 million.”
According to Butt, cellphones and mobile internet is an important tool to reduce poverty, therefore, policymakers should consider providing relief to the telecom industry, which has been burdened with heavy taxes.
Published in The Express Tribune, January 26th, 2016.
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