Amid a strong backlash from the IT and telecom industry against the proposed increase in tax rates, the government is considering revisiting the measures proposed in the mini-budget.
Not only the five telecom companies have expressed their concerns and disappointment over the move, but even Minister for IT and Telecom Syed Aminul Haq is opposed to the proposed measures.
Sources in the ministry said the IT minister has conveyed the resentment of the stakeholders to Prime Minister Imran Khan. “The IT minister told the prime minister that an increase in tax on the telecom sector will have a negative impact on growth and investment,” sources claimed.
Meanwhile, PTCL, Jazz, Telenor, Ufone and Zong have warned that the proposed increases in taxation, if implemented, will significantly retard the role of the telecom industry in terms of GDP growth of Pakistan.
These companies in a joint letter to Finance Minister Shaukat Tarin and IT Minister Aminul Haq said that the smartphones connected through mobile broadband are the largest drivers of digitisation and an increase in their prices will decrease the affordability of the masses and reduce the usage of mobile internet. It added that Pakistan has one of the highest rates of taxation in the world. “While countries are subsidising internet services to strengthen broadband access for citizens, especially students, I am disappointed with talks about raising withholding tax (WHT) on cellular services to 15pc in Pakistan,” Mr Ibrahim saidMoreover, the telecom industry said that the government was backtracking from its earlier commitments of reducing the WHT on mobile services.
The WHT was reduced from 12.5pc to 10pc in the 2021-22 budget, with the announcement that it will be brought down to 8pc in 2022-23.
It can help boost innovation as well as national development. In order to build a robust digital economy, cellphones and broadband and internet services must be made accessible to the masses. Moreover, in a country with a high youth bulge, these services are equally important for students and hence the future of the country. The proposed 17% sales tax on import of technological devices valuing over $200 will indeed affect the learning capability of students who already find it difficult to afford adequate facilities necessary to compete in the modern world. The growth in IT that PM Imran so desperately aims for will only come about if the government incentivises and subsidises internet and technological services, which will in turn strengthen the overall digital infrastructure and the national economy.