Govt Reconsidering Increased Taxes After Backlash from Telcos

The government is revisiting its decision to increase the tax on the telecom industry after receiving backlash following the announcement of the mini-budget.

The Minister of IT and Telecom, Aminul Haq, does not support the proposed taxes in the mini-budget.

The Minister for Finance, Shaukat Tarin, told Dawn that a meeting, with the Minister of IT in attendance, has been scheduled between the stakeholders to address their concerns. He remarked that the telecom sector is “close to his heart” and that he would look into its problems.

Prior to this, the telecom companies had written a letter to the Ministers for Finance and IT, stating that the proposed increase in the telecom sector tax would decrease the role of the telecom industry in terms of GDP growth. They stated that they were worried about the government’s decision to increase withholding tax (WHT) from 10 percent to 15 percent in the mini-budget and the GST to 17 percent.

Their letter conveyed the industry’s concerns regarding the government’s decision. It detailed that 30 percent of the population is below the poverty line, which is why increasing WHT on all the subscribers is unfair.

Telecom companies said that after the government’s detailed deliberations with the industry over more than a year, it had approved the reduction of WHT from 12.5 percent to 10 percent this year through the Federal Budget that was approved in June 2021, along with another reduction from 10 percent to 8 percent in the next financial year. Just six months after the decision, the government’s reversal will affect the policies and the confidence of the investors.

The telecom companies also opposed the increase of GST to 17 percent for cellular mobile handsets, tablets, and PCs in the letter, and stated that an increase in their prices would affect the affordability of the masses and digitalization. Moreover, the companies’ chiefs are confident that the concerned ministers will stop the increase in both the taxes.

The CEO of Jazz, Aamir Hafeez Ibrahim, tweeted on Tuesday that he was disappointed to see Pakistan thinking of levying a 15 percent tax while other countries are subsidizing internet services.