KARACHI: The Consumer Rights Protection Council of Pakistan (CRPC) has urged the Finance Ministry to provide some relief to consumers by reducing the rate of taxation on telecom services as the masses are already overburdened with heavy taxation in all sectors.
Addressing a press conference here CRPC President Shakeel Baig said that the low-income workforce – masons, plumbers, rickshaw drivers – to the salaried-class and other professionals, telecom services have become essential for everyone.
He said that 80 percent of Pakistan’s total subscribers’ base was already below the threshold of taxable income. “The taxation rates, as proposed in the federal budget 2014-2015, are unjustifiable.”
“The finance ministry should immediately reduce withholding tax to 5 percent and bring the federal excise duty to a single digit,” Baig told the media.
The CRPC chief demanded that the government should withdraw the newly-imposed international mobile equipment identification (IMEI) activation tax and reduce import duties on telecom equipment, since it would make the service expensive for users and slow down mobile broadband penetration.
Telecom services are heavily taxed in Pakistan, where cellular subscribers pay close to 40% in taxes to the government. According to pre-budget figures, these taxes include a 19.5% FED, 15% withholding tax and other taxes such as service charges.
Besides, the service providers pay additional taxes that include SIM activation charge, license fees, universal service fund levies and other regulatory fees.
The finance ministry on June 3 reduced FED on telecom services by 1% to 18.5%, which according to the telecom industry is applicable only in the case of Islamabad and Balochistan.
The government also proposed to reduce withholding tax from 15% to 14%. Besides, the government also introduced a new tax of Rs250 on the purchase of new mobile phones in form of IMEI activation tax.
Many consumers have asked us to raise the issue of high taxation on telecom services, Baig told media. “Through this platform [press conference], we would like to convey our message to the government for lowering the taxation on telecom services,” he said.
On every Rs100 prepaid card, consumers pay Rs26.60 in taxes, the CRPC chief said. The reductions proposed in the budget translate into Rs1.26 in customer’s benefit, which is insignificant.
“We will appeal to the finance ministry to reduce taxes on the telecom services. If the government doesn’t consider these requests, we will seek legal options,” Baig said.
