Government Should Lower Taxes on Telecom Services: Cellular Companies

All cellular companies, except Ufone, have collectively asked the government to reduce taxes on telecom services. In a collective letter, mobile phone companies have mentioned the government to reconsider increased GST, taxes on handsets and removal of SIM activation tax.

This was carried away after a significant decline in revenues and increased operational expenses of cellular companies. However, cellular companies are still awaiting any positive response from the government regarding this.

While discussing the issue with senior officials of cellular companies, they showed their concerns over the taxes that were imposed on telecom services. “Throughout the country, there is 16 percent GST on all services, it is relatively unfair for Telecom sector to bear 21 percent GST”, commented one of official. He said that, government should reap the benefits of telecom sector for longer period, but these increased taxes on sector will curtail not only government’s share in the long run but is also leading cellular companies towards a catch.

It may be recalled that mobile phone handsets’ prices were also hiked by Rs. 500 tax per handset – which was further increased by another Rs. 250 to reach Rs. 750 tax per handset. It is also observed, through market survey that mobile phone retailers have increased mobile prices by Rs. 1000 to Rs. 1200. This increase is also seen in used handsets (second hand mobiles) in similar manner.

All these elements are collectively impacting the telecom sector and its growth that has seen a steep decline in recent months. Financial analysts term this situation a strategic mistake by government to put extra burden on a single industry to level its deficits.

By the way, Cellular industry paid PKR 100 billion taxes in year 2007-08, and it is expected that these share will hit PKR 120 billion mark this year.

Not only the telecom users but telecom companies also pay huge money for their licenses to the government of Pakistan, which values $147 million annually.

While eyeing current economic situation of the country, one should not expect any good news regarding these taxes from government, but financial gurus must tackle the situation in an effective manner to revive telecom sector.

It merits mentioning here that a mobile customer can use Rs. 64 only out of Rs. 100 card after paying taxes and service charges.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK


  • Mudassar

    Hi,

    Just for info, Warid has started Miss Call Alerts for post paid customers at Rs 30 + tax. I happened to know this when I call at there IVR ( 321 ) from my post paid number. There was an announcement. I don’t know if it is new or old.

    Regards
    Mudassar Ijaz

  • Shahzad Khan

    Little Late but good try from all service providers

  • Asif MUSHTAQ

    Yes, these taxes are killing the telcos. They connection activation tax of hundred of Rupees must be hurting them real bad.

  • Zen Blog

    These should be less because at the end we suffer.

  • fakester

    I have been a Ufone postpaid customer for a long time now & have always admired their services and pricing. However, when you start receiving bills for example of Rs.1,500 of which Rs.750 are just taxes- I think our telecom industry has gone bak to the dark ages when a call used to be charged at Rs.5 per minute! I mean come on – 50% of the total is tax?!? Its almost unheard of…
    My anger is not towards the companies-its towards our corrupted leaders who are & always have been pocketing mass amounts of money from the people. And thanks to the illiteracy in Pakistan – we will always re-elect the same people to screw us just a bit more in the future!

  • Sajjad Kanju

    reply to fakestar: dear this is not true that u got tzx of worth Rs. 750 on the total bill of 1500, bcoz being the emplpyee of ufone, i know the rules and regaulation of ufone both prepaid and postpaid. But ur 2nd point is worth-reading and appreciable. May ALLAH Almighty show them (responsible of price/tax raising upon poor public) the way of righteousness and purity. Ameen