The Pakistan Economy Watch (PEW) on Sunday questioned wisdom of the economic managers of the government behind the decision to slap additional tax on the telecom industry. The short-sighted decision will increase burden on masses, add to problems of telecom sector and hurt the reputation of PML-N, it said.
An increase of 5 per cent withholding tax can have an impact on foreign investment in the telecom sector; it can hurt network expansion plans of the operators and compromise quality of the service, said Dr Murtaza Mughal, President PEW. He said that the decision based on fulfilling tax collection target of Rs2.475 billion can reduce communication between people paving way for poverty and other problems. Dr Murtaza Mughal said that taxing the already heavily taxed sector can have undesirable impact on plan of the government to reduce budget deficit through auction of 3G licence.
He said that former government also unilaterally imposed Sales Tax on mobile phones hurting 85 per cent of the poor and middle-class consumers only to get around 50 per cent decline in sales.
He informed that India has imposed 10.3 per cent tax on telecom sector while Bangladesh has levied 15 per cent taxes on it while in Pakistan all the taxes and duties will be 41.50 per cent from July 01 adding to the miseries of masses.
Telecom sector has contributed Rs 510 billion as taxes in the last nine years but successive governments have squeezed the sector considering it a cash cow to hide their own inefficiencies, he observed. Despite all odds, Pakistani consumers still enjoy economical calling rates in the entire SAARC region; however, days of affordable communications seems to be over, said Dr Mughal.
