Hike in mobile tax invites criticism

Industry calls move counterproductive to govt’s goal of digitalisation

KARACHI:

Electronic dealers and other relevant stakeholders have condemned the government’s recent action of increasing duties on mobile phones and laptops in the mini-budget and declared the act counterproductive to the leadership’s goal of digitalisation.

Addressing a press conference at the Karachi Press Club (KPC) on Tuesday, Karachi Electronics Dealers Association (KEDA) President Rizwan Irfan lamented that the present government takes decisions overnight and without holding prior consultations with the stakeholders.

“Prime Minister Imran Khan talks about making ‘Digital Pakistan’ but his actions are against his words,” he criticised.

According to him, such measures are not only detrimental for trade but also for people hailing from underprivileged backgrounds. He detailed that the lower class of the society used digital gadgets primarily for educational purposes given that outbreak of Covid-19 had turned laptops and mobile phones essential for education.

SI Global CEO Noman Ahmed Said told The Express Tribune that mobile users may now have to pay 15% tax instead of 10%.

“A majority of mobile phone users in the country belong to low-income group and they are either not in the tax net or do not file taxes hence the adjustment of such levies to benefit the ultimate consumer will remain a challenge,” he added.

He shared that most mobile phone users of Pakistan fall under Rs12,000 to 30,000 price slab hence the hike in tax will spark trouble for a vast majority of people that possess low purchasing power.

“Adopting a usage-based approach will be better for the government and beneficial for the public,” he said. 

While the increase in taxes may fetch an additional Rs4-7 billion for the government, the question here is what effect it would have on the low income bracket, he expressed concern.

Ahmed urged the government to take all stakeholders on board prior to implementation of any policy. He was of the view that raising small amount of revenues from already taxed people might not fulfill the government’s aim of enhancing collection however, widening of the tax net can aid significantly in this regard.

Read Telecom users feel pain of ‘mini-budget’

“This will have a drastic impact on all booming sectors of the economy including IT and textiles,” he said.

Ahmed emphasised that students, educational institutions and low-income households needed support of the government instead of hike in levies.

He appreciated the efforts made by the Pakistan Telecommunication Authority (PTA) to regulate imports from specific channels however, he voiced fear that increase in taxes may give rise to smuggling and encourage people to search for loopholes to evade taxes.

He held the view that the government should not slap any more taxes on digital products, particularly mobile phones, because they have become a necessity for masses.

“However, the positive impact of this decision is that it will protect and relieve local manufacturers but on the flipside, it might discourage international investors from pouring money in Pakistan,” he said.

“Foreign investors in the manufacturing sector will think twice before investing in technology,” Said projected, adding that the situation could have been avoided if the government had taken the input from relevant stakeholders before implementing the taxes.

He feared that the growth of the sector, which had picked up over the last one year, might lose its momentum if the government did not reverse the taxes.

He said that imposition of more taxes on technology would not yield any dividends rather, they would hurt the young generation aspiring to be technopreneurs.

Alpha Beta Core CEO Khurram Schehzad said that taxes on internet and on means to achieve digitisation would act as a hindrance in way of achieving a digital economy

Such actions also go against Prime Minister Imran Khan’s vision of ‘Digital Pakistan’, he noted.

“On one hand, the government wants to promote digitisation and on the other, it is imposing taxes on digitisation tools,” he underlined.

Published in The Express Tribune, January 26^th, 2022.

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