PTA chief opposes tax on broadband services

Says it will hamper telecom sector growth.

KARACHI: The opposition to the Punjab government’s recently imposed tax on data services reached its peak on Thursday when Pakistan Telecommunication Authority (PTA) Chairman Dr Ismail Shah lent support to the private sector’s calls for withdrawal of the duty.

“The recent imposition of taxes on data services is not good for the growth of telecom sector, which could impede the penetration of mobile broadband, particularly in Punjab,” said the chairman during the 8th Pakistan TeleCON-2015 conference.

The chief of telecom sector’s regulatory body said this while referring to the Punjab government, which through a statutory regulatory order (SRO) on May 29 imposed a 19.5% tax on internet services that provide more than 2 Megabits per second (Mbps) connection or exceeds Rs1,500 in monthly consumption.

Discussing the taxation structure of the Information and Communications Technology (ICT) sector, Shah said the PTA has approached the province to explain that taxes on data services will not bode well for the entire telecom sector and consumers of the province.

The chairman told the audience that they were collaborating with the Ministry of IT and Telecom to convince the Punjab government to consider indirect revenues through internet uptake and promising economic activities that are inevitable with tax-free data service – and tax the internet itself.

Shah supported the stance of Jehan Ara, President of the Pakistan Software Houses Association who also spoke at the conference. “There is a need to reduce the tax burden on fast-growing, high-potential sectors like telecom and ICT, to give them the freedom to grow faster, enrich the national economy with healthy revenue streams and create new employment opportunities,” she said.

Coinciding with the event was a blackout campaign by local bloggers, which exceeded 100 bloggers on the same day. These bloggers and digital publishers are blacking out their websites in protest.

They are displaying black screens on their home pages and demanding that the Punjab government reverse its decision of taxing the internet, according to industry sources.

The SRO was a fresh blow to the telecom sector that invested more than $1 billion to purchase licences for mobile broadband services in April 2014. Given that Punjab accounts for more than 50% or Rs14 billion of the sector’s overall data revenue (about Rs26 billion), the CMOs – already among the highly-taxed sectors – opposed the SRO in a joint statement last week.

Published in The Express Tribune, June 12^th, 2015.

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