Digital Publishers Urge KPK Govt to Remove Internet Tax for the Province

Digital publishers countrywide have demanded Khyber Pakhtunkhwa Government to remove tax on broadband internet and data services of mobile phone companies to give relief to masses of the province as similar to Punjab Government which withdrew 19.5 percent Internet tax last month.

In a press conference held, prominent digital publishers urged Chief Minister of Khyber Pakhtunkhwa (KPK) to remove taxes on internet which is directly linked to the progress of the provinces mainly for reforms in governance, development in business and promotion of education not only in urban but also in rural parts.

According to an estimate, KPK comprises 10.5% of Pakistan’s economy having 12% internet users of Pakistan’s total internet subscribers with potential to grow significantly with increasing availability of 3G/4G services in different cities.

KPK imposed 19.5% taxes on all sorts of Internet (DSL, EVO, 3G, 4G, WiMAX) in 2014, unfortunately the provincial government did not remove taxes as of yet though a similar tax was imposed in Punjab in May 2015 which resulted a 7% quantum dip in broadband consumption in accordance with facts sheet presented by Digital publishers, hence the tax was removed in November 2015 with retrospective effect.

Digital Publishers said the benefits of increased broadband usage — with tax-free internet — will also mean feasible and smooth e-health, e-education, e-farming and other similar internet and smartphone based projects.

Broadband internet penetration will not only impact positively on academic ventures of the KPK government but it will also help flourish the high-tech startup ecosystem involving young educated minds from the province, they added.

The CMOs had written a joint industry letter to CM Khyber Pakhtunkhwa earlier in June 2015 demanding of the provincial government to waive off General Sales Tax (GST) on internet and data services which is slowing down the penetration of 3G and 4G technologies throughout the province.

Cellular mobile operators in their joint statement said, “Taxation on Telecom Sector in Pakistan is currently already one of the highest in the world. We believe that imposing additional taxes in the form of GST on data services will not only hamper economic growth in the country but will also adversely impact internet penetration. We strongly believe that it will slow down the growth of 3G and 4G in the country.”

Left to right: Saad Warraich from Telenor, Omar Manzoor from Mobilink, Imran Janjua from PTCL, Amir Pasha from Ufone

In 10 years, fixed broadband could create 3.7 million broadband subscribers. In one and half year, mobile broadband (3G/4G) took it to 25 million depicting a substantial growth of 600%.

CMOs added that cellular operators have invested $10 billion over the period of past one decade and have plans of further enhancing their investments up to $4 billion in next three to four years mainly to expand 3G/4G technologies in the country including KPK.

Tax rate on telecom services in Pakistan is 40% which is one of the highest effective tax rates in the world. In addition to taxes, 19.5% GST on mobile broadband and data services added burden on the consumers.
Although tax on mobile internet is rare in the world besides Pakistan only Bhutan levied tax on internet and there too the tax rate was merely 5 percent.

Backed by cellular mobile operators, banks, PASHA (Pakistan Software Association), ISPAK (Internet Service Provider Association of Pakistan), consumer associations and civil society, Digital Publisher also urged Imran Khan Chairman Pakistan Tahreek-I –Insaf to fulfill promises of youth who elected his party on the slogan to provide them opportunities and benefits of technologies in social sectors mainly in education and health.

Economic studies have proven that there is a positive relationship between broadband penetration and GDP growth in both high and low income markets as a ten percentage point increase in broadband penetration grows national GDP by 1.5 percent.