Samreen Siddiqui, Sadia Sami & Ruba Haroon
Mobile sector revenues were $3.4 billion in 2017. Overall imports of telecom show the decline of 0.35 percent in the month of July-October 2018. Imports of Mobile Phones that stood at $61.189 million, registered 11.84% growth as compared to $54.709 million imports in October 2017. The legal import of mobile phones reached to $847.656 million in 2017-18. The number of cell phone users in Pakistan reached to 156.92 million by end of February as compared to 153.302 million by the end of January 2019 that registered an increase of 3.698 million during the period. Furthermore GDP would increase by $360 million. Due to taxation system Pakistan economy performed competently in recent year grows in 2016 at 5.5% and 5.7% in 2017.
The total tax contribution was estimated at $638 million in 2017 which shows the 19% of total market revenue. Additionally Telecom Sector has generated over Rs.209 billion in June 2013 to March 2019. PTA ranked as the 7th largest tax paying government organization in 2018 to Federal Board of Revenue. In January 34,000 mobile users filed registration and they are registered individuals, 116 had paid taxes on their handsets amounting to Rs1.5 million.
Mobile sector is dealing number of high taxes on consumers and mobile operators. It increases the productivity in economy of Pakistan. Through this system living standards will be high and improve the international competitiveness in country. This covers the direct contribution by cellphone operators that estimates 7% of total tax revenue of Pakistan. Through these positive effects mobile phone businesses would support government objectives. This improve the quality of service, mobile operators have potential to contribute in the Pakistan economic growth. Expending access in mobile services can enable Pakistan contribute fully in the economy; decrease the poverty by supporting the country in achieving its goals.
To resolve expats mobile registration obstacles Senate body calls for legislation. The legislation committee said that registration of mobile phone costing more than $500 was Rs31, 520 there is a need of reviewing this policy and bring change in it. One of the biggest issues in mobile registration was that there was no reduction in mobile trafficking. It’s also stated blocked phones are getting unblock in the black market for as low as Rs.2000. Around 2.8 million devices were banned and the law enforcement of this step shows obstacles in this system.
Almost 90% business of Mobile dealers was based on import that has been affected by the law. This law was applicable for saving billion of rupees that would be collected to resist the increased illegal activities. Traders and mobile users resist this policy and go on a strike but government still doesn’t take an active on it. Also customer is not willing to buy cell phone because of taxation so the sales rate decreasing day by day by 40%. Taxes applicable on consumers in mobile sector directly affect the affordability of services and creating barriers.
The outcome of tax saving, Pakistani mobile operators will increase the investment by $4 million in 2023. The employment, economic activity increase by 7000 jobs approximately. The gain in tax revenue is about $55 million per annum in 2023. Government implemented regulatory duty on mobile phones kits to encourage local assembling.
The Turkish model followed by Pakistan the new mobile tax policy for foreign visitors allowing one and only duty-free mobile set to limit the import of illegal phones in the market. This system faced the criticism and unable to perform well. As per the views of people high tax imposition on bringing more than one mobile from abroad discourage oversees of Pakistan.
Government need to apply tax on the limited level for instance if the mobile price is Rs20000 so the tax should be Rs2000 on that device but tax rate is too much high if cell phone price is Rs10000 so the tax is Rs4000 so government should decrease the amount of tax then system would be acceptable by users and support to the country.
To implement the system in the country in an effective manner so Pakistan Telecommunication Authority should open their two offices in every city and also need to hire trained staff who can access the technology and utilize the resources in a proper manner and ensures this systems authenticity. Furthermore rules related to taxes should be clear or not more complex to achieve tax policy which is facilitating the cellular businesses and consumer.
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