Do you remember this $4 phone that was released in India just last month? If yes, have you ever wondered that how much taxes a Pakistani consumer would have had to pay for this $4 Phone if it were released in Pakistan?
While this phone isn’t coming to Pakistan, we are here giving a taxes’ comparison just to give you an idea of how badly are we taxed and the telecom sector in particular.
For information purposes, here is the list of taxes that $4 smartphone will have in Pakistan and then check the final price for your amusement.
So a $4 could cost you at least Rs. 2,010 in Pakistan, all thanks to taxes.
Explanation of Taxes:
CESS: CESS is the tax applied on the transportation of goods through or with-in Punjab. Purchases made in Sindh or other provinces could avoid this tax.
Sales Tax: This sales tax is that was recently doubled in this year’s budget. Sales tax on phones/smartphones is Rs. 500, Rs. 1,000 or Rs. 1,500 depending on the specifications of the phone.
Based on this $4 phone’s specifications, a Rs. 1,500 sales tax would be applicable in its case.
VAT: A 3% VAT is applicable on the import of all categories of handsets.
Income Tax: 5.5% income tax is applicable on the import of all categories of handsets.
Points to ponder:
– All taxes, when they reach a threshold level, start impacting negatively on industry, government as well as on consumers. Same has happened in Pakistan as taxes on telecom sector showed negative results through declined revenue for private sector and also declined tax collection for the government sector during 2014-15.
– Regardless of negative impact, government hasn’t stopped increasing the taxed on telecom sector. As a reference, taxes on smartphones/feature phones were increased this year as well.
– We know that a 10% increase in internet adoption results in GDP growth of 0.04 percent to 1.5% with emerging markets having higher impact. Authorities concerned should consider that with undue taxes on mobile phones and telecom sector, they are just raising the entry barrier for masses and that will ultimately result negatively for the national economic growth.
– There are countless researches (from both national and international institutes/agencies) that suggest that taxes on telecom sector hinder the overall growth of a country. How will our leaders get this point and start thinking long-term instead of achieving short-term goals?