While telecom operators and mobile phone manufacturers have expressed concerns over taxation measures and the subsequent hike in service and set costs after the budget is approved, traders have already started charging higher prices for the current stocks.
Telecom Association Of Pakistan’s Plea
The Telecom Association of Pakistan (TOA) has written to IT and Telecom State Minister Shaza Fatima to express concerns over the proposed Finance Bill 2024–25. The letter identifies several problems, namely the impracticability of the proposed 75% advance tax collection on mobile services for non-filers due to current infrastructure constraints.
Telecom Industry’s Argument
According to the letter, it is not appropriate for the FBR to penalize telecom carriers for non-compliance by customers with the Income Tax General Orders. The industry argues that telecom companies are not at fault in tax-related disputes; rather, they are only facilitators.
Threat to “Digital Pakistan” Vision
It further stated that the Finance Bill’s provisions would destroy the industry and thwart the government’s goal of creating a “Digital Pakistan.”
GSMA’s Apprehensions
The Global System for Mobile Communications Association (GSMA) had previously expressed similar apprehensions regarding the budget 2024–25’s taxation of mobile phones, characterizing it as a measure that will erode the trust of investors desiring to enter the Pakistani market.
According to Mian Abdul Rehman, the chair of the Pakistan Mobile Phones Manufacturers Association (PMPMA), consumers will pay more for mobile service and have fewer options for reasonably priced mobile devices if the planned tax measures are put into effect after July 1.
Impact on Affordable Smartphones
He continued by saying that the budget’s tax initiatives will raise even the inexpensive cost of mobile phones.
Widening the Digital Divide
The government wants to raise the sales tax on smartphones that cost less than $500. According to the PMPMA, it will significantly increase the digital divide between males and females in low-income categories and blow-up digital penetration among these groups.
Conclusion
According to Rehman, the lowest smartphone, which is estimated to be worth Rs25,000, will sell for Rs30,000 after the 18% sales tax. This is detrimental to those whose incomes and means of subsistence are dependent on digitally mediated transportation, such as ride-sharing services that rely on apps or the delivery of products via apps.
