KARACHI: The telecom operators are planning to convince the provincial governments of Khyber Pakhtunkhwa (KP) and Sindh for removing the general sales tax (GST) on data service and broadband Internet in the coming months.
The official sources said the cellular operators are ambitious to convince the provincial governments of KP and Sindh to remove tax on Internet and provide relief to the masses of the provinces. The operators would approach the provincial governments through the Ministry of IT and Telecommunication (MITT) and Pakistan Telecommunication Authority (PTA) to explain the disadvantages of high tax on Internet and its direct and indirect impact on the economic growth and social development of the country.
Tax on Internet was introduced by the Sindh government for the financial year 2014-15, in which 19.5% GST was imposed on Rs 1,500 connections, the KP government also replicated the same tax. However, a leading broadband and telecom operator has filed cases for stay in the Peshawar High Court.
The telecom operators have been submitting taxes to the court and are bearing the tax from their own pockets rather than passing on to the consumers. The operators believe the tax on data services and internet would hamper growth on the utility of newly launched 3G/4G services because it is not possible for companies to bear the burden for longer time.
Pakistan is the one of the two countries, after Bhuttan, which imposes taxes on data services and Internet. The country leapt to secure first position in the world’s ranking of highest tax regime with 53% of the overall taxes including 19.5% on call and voice services, 14% withholding tax and now 19.5% additional services tax which was levied by the Sindh and KP government last year on over 2 Mpbs Internet speed (or Rs 1,500 monthly connection charges), hence technically it imposed charges on 3G/4G/LTE of the telecom services.
Pakistan has left behind Turkey with less than 50% tax, followed by Gabon with 40% and Tanzania with 34%. Recently, the digital publishers and bloggers sent a letter to KP Chief Minister Parvez Khattak, demanding withdrawal of 19.5% taxes on the broadband and data services. Backed by the cellular mobile operators, Internet Service Providers Association of Pakistan (ISPAK) and Pakistan Software Houses Association (PASHA) publishers and bloggers urged the provincial government to realise the importance of the broadband in the development of the province that would aid the political leadership in achieving the target of economic prosperity and social upbringing. They mentioned that private and public sector organisations are already capitalising the fruits of online solutions, as KP’s online FIR registration facility is one such example having productive and easy use for the masses. Whereas there are scores of apps that could provide real benefits to the masses with the use of Internet in their lives through feasible and smooth e-health, e-education, e-farming and other similar Internet based projects, they added. Since Pakistan Tehreek-e-Insaaf (PTI) in general and KP government in particular are putting special focus on education and youth development, the broadband penetration would not only impact positively on academic ventures of the KP government but it would also help flourish the high-tech ecosystem, involving young educated minds of the province, the letter stated.
The telecom operators are optimistic that provincial government would review their decisions of imposing taxes on broadband Internet to relieve the masses. They were of the views that the government could make revenues from reducing the burden of taxes on telecom users, as it would improve the utility of the services and generate tax income for the provincial kitty. In this regard, they said the provincial government should hold consultation with the stakeholders of IT industry and telecom sector to expand services of Next Generation Technologies at faster pace throughout the provinces. Economic studies have proven that there is a positive relationship between broadband penetration and GDP growth in both high and low income markets, as a 10% increase in broadband penetration grows national GDP by 1.5%, they added.