Punjab Is Considering Imposing Internet Taxes Again

After refusal of other provinces to withdraw taxes on internet, Punjab government is considering re-imposing the tax on internet in the province, industry sources revealed.

Punjab government had taken bold step to withdraw the taxes on internet. However there is still 19.5 percent duty on internet in Khyber Pakhtunkhwa and 18 percent in Sindh.

Since other provinces have not withdrawn the taxes on internet, Punjab Revenue Authority (PRA) is now under tremendous pressure from Finance managers to re-impose tax in the province, sources added.

Punjab government has called on a meeting of telecom operators on March 8 in Lahore where the issue would be discussed in details. Punjab government is of the view that KPK and Sindh have not withdrawn the taxes and are generating good revenue. However Punjab is losing tax revenue after the withdrawal of this tax.

The provincial government has allegedly started pressurizing tactics while saying that the benefit of tax withdrawal in Punjab was not passed on to the general public.

Punjab government had sent a strong message to other provinces by abolishing internet taxes that was imposed in May 2015. However, other provinces are resisting all proposals and requests and still continue to tax the internet.

Soon after imposing 19.5% taxes on internet, Punjab government realized that taxes were more harmful than good and decision was reversed with the aim that internet should spread in province with a better adoption trajectory.

Pakistan Telecommunication Authority (PTA) has also approached provincial governments itself in order to convince them to remove internet taxes. However, it seems that all efforts went wasted.

Internet Taxes in Pakistan are as high as 33.5%.

Just in case if you don’t know, KPK charge 19.5% sales tax on internet, while Sindh charges 18.5% tax on internet.

Additionally, there’s 14% withholding tax that internet users (across the country) have to pay to federal government. In total, internet taxes amount to around 33.5% in KPK while they are 32.5% in Sindh. Users in Balochistan and Capital pay 14 percent FED only.

For the first time since deregulation of the telecom sector in 2003, revenues of Pakistani mobile phone operators showed a negative growth during last fiscal year (2014-15), arguably due to tremendous amount of taxes on telecom sector.

Not only this, telecom sector’s contribution towards government taxes also declined (during 2014-15) to prove that the very purpose of taxing telecom services back-fired and government collected lesser taxes from sector as compared to previous year. However, no one at the government level is concerned or even considering these figures.

Countries make all sorts of efforts to make sure that internet is affordable to their masses due to the proven fact that internet access grows the GDP of a country from 0.4% to 1.5% with higher impact for developing economies like Pakistan. But the situation right now in this country is that of one step forward and two steps back.