Business

Stakeholders criticise tax on internet usage

ICT3 chief says imposition will lower mobile broadband uptake.

Our Correspondent June 08, 2015

ICT3 chief says imposition will lower mobile broadband uptake.

LAHORE: Perhaps, one of the most shocking aspects of Friday’s budget announcement was the imposition of a 100% tax on the telecom sector. As news settled in, Information Communication and Technology (ICT3) President Sohaib Sheikh weighed in on the debate.

“The new taxes on internet and data usage will have an adverse effect on telecom operators, which are working on the roll-out plans of all third and fourth generation networks,” said Sheikh who is the chief of the think tank comprising members from the telecom industry.

Addressing a press conference, jointly organised by stakeholders including ICT3, telecom companies and other stakeholders, Sheikh further said that all Cellular Mobile Operators (CMOs) are heavily investing despite an increase in import duties on telecom equipment.

“This tax by the Punjab government on internet is going to hamper the current 3G/4G uptake that has reached 15 million subscriptions in just one year of 3G/4G launch,” Sheikh added.

The Punjab government, through a notification, imposed 19.5% GST on usage of internet services on broadband, or cellular data providers to every consumers excluding educational purposes.

According to the notification issued by the Punjab government, this tax is imposed on all kinds of internet services in Punjab including 3G, 4G, DSL, EVDO, fibre.

Digital stakeholders have decided to black out their websites against the imposition of taxes.

“One year ago, the telecom industry of Pakistan had bought 3G/4G licences worth $1.2 billion, additionally paying 10% withholding tax on it,” Sheikh said..

Punjab is likely to collect around Rs3 billion in taxes from the sector this year; however, a corresponding negative growth on internet uptake will cause the national economy an estimated loss of Rs200 billion in five years.

Published in The Express Tribune, June 9^th, 2015.

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COMMENTS (10)

Abdul Hafeez | 9 years ago | Reply Internet is mostly used by IT Companies and Freelancer people. This is the only industry in Pakistan which is rapidly increasing and bringing money in Pakistan by selling services. Millions of un-employed but skilled persons doing work as freelancer and helping our economy by bringing money from all over the world. This tax will disappoint and many people would stop working. This is an IDIOTIC approach of the Govt of Pakistan. Govt of Pakistan should facilitate IT industry and Freelancers to grow their work instead of increasing burden of taxes.

Ahmad Mirza | 9 years ago | Reply Change is always hard to come by. You need Evolution my friend; these apps are helping people and do tell me which Villages have you visited recently? People in Villages are active users. Anyway, try to do more research.

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Captian Planet | 9 years ago | Reply @Ahmad Mirza: How Mobile internet will save cost to business, And how much it will cost that will turn profits into losses..,,How much Pakistan has progressed in last decade with free Sms and calling bundlres and Packages... I think it is the real reason why cheating in exams trend in rise and fake degrees business has success.... If you compare UK with Pakistan...So people know well that Pakistan is ideal because no business man can make such money in Uk which they do in Pakistan...Because in UK there is Progressive taxation and in Pakistan Avoidance and Evasion. And Taxes are to discourage capitalism which you are encouraging by saying there should be no tax, nocustom duties, And by this few Players will run whole economy... Isnt 60s Pakistan Much better and save as compare to now where people are connected 24/7 with friend and family through Apps.... N buy the way these all are luxury things not necessity,, So should be charged heavily and that money should be transfered to real poor, who do not have to eat, Have no shelter to live, know nothing about mobile and apps...!!

Ahmad Mirza | 9 years ago | Reply @CaptainPlanet You really should understand basic Economics. Subsidies and Cheap Resources mean more benefit to the organization; more benefit means more profit; more profit means more investment; more investment means more jobs; more jobs means creating wealth; more wealth in terms of Education, Monetary, and Technical Expertise. You take that away and how do you compete with the world? You have a very narrow approach about whatsapp, viber etc. What do you think that people are only using it to share porn? Now a days people are connected 24/7 with their friends, family, Colleagues and Organization via this whatsapp and viber and late night packages have nothing to do with internet; secondly US and UK on average a person what they earn can spend it to buy 40 Liters of Petrol everyday? Can someone in Pakistan with National Minimum Wage can do that? Kindly do think about it before you write something else. And what i have just told you is the tip of the iceberg.

captain Planet | 9 years ago | Reply @Faraz: @Salman Hussain Zaidi: @Ahmad Mirza: How internet help support poor person, who even doesnot have electricity or even to eat... How facebook, whatsapp, viber,, late night packages, Make poor person rich please explain..... If you people are so worry about poor, There should be 30% additional to 50% an internet luxury tax.... And that amount should directly be spend for elimination of poverty....

Faraz | 9 years ago | Reply @Captain Planet: You will only be harming labour productivity and the development of the economy if you make Internet access more expensive. Funny how you are using the Internet to post this comment and then asking them to make it more expensive. If you didn't have Internet access you wouldn't even know that this was an issue to begin with. Yet, you would deny others the chance to learn from the Internet which is the greatest repository of knowledge in human history. There is also no point in comparing absolute numbers across countries as different as Pakistan and the US. You need to compare the cost of Internet access relative to people's incomes in these different countries. Also the US isn't a model for Internet access. They are way down in the list of countries with the best broadband. South Korea and Sweden would be better examples.

Pacer | 9 years ago | Reply The internet pays for the metro

Salman Hussain Zaidi | 9 years ago | Reply @Captain Planet if you are Richie Rich doesnt means that every Pakistani can afford high cost on Internet or correct me if i am wrong are you trying to restrict this one facility which every class people can afford to only Richie Rich. People like Captain Planet is a curse to this Pakistani Nation.

Ahmad Mirza | 9 years ago | Reply You are thinking of Consumers and what about companies who have Dedicated Bandwidth; they are already paying 80-100$ / Mbps. So, Mr. Captain Planet you are suggesting that they should add 20$ more on their MRC for internet and this is just the tip of iceberg. 4Mbps is the norm which nominal companies use so they are already paying 400$ for that now they shall be paying 80$ more. Money does not grow on trees and on a crucial time when IT sector is trying to compete with the emerging IT markets. US and UK are not emerging markets; they develop their products in 3rd wold countries to cut costs; how is someone supposed to compete when they have to pay extra; charge it to the client; they will simply take their business else where. Easy for you to say when your lively hood does not depend on it.

Captain Planet | 9 years ago | Reply Internet and Cellular services should be heavily charged with 50% taxation. Because of lowest rates for their services around world, 17-18% on services serves nothing.....All cellular companies should reconsider their Packages and services and offer same what is offered in U.S and Uk (modern world)... By this we will avoid reasource wastage, unnecessary communication, And lots of electricity and time...!!

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