Additional tax means sub-quality communication

Additional tax levied to the telecommunications industry has a big impact towards the investors as well as the masses.

The telecom sector complained against the government on the five percent (5%) added tax slapped to their services. For nine years, they contribute more than Rs 510 billion to the government, which considers them to be a cash cow.

In India, telecom taxes had gone up to 10.3 percent, Bangladesh 15% and Pakistan 41.5%. This said increase would eventually affect the sector’s expansion plans and therefore compromise the quality of their services.

The tax collection goal of Rs 2.475 billion, if fulfilled, could actually reduce the means of communication. Should taxes go up, the telecom sector would force themselves to increase rates on their services, which may lead to wealthier people to conveniently afford them.

This could otherwise affect sales of mobile phones and mobile applications which may eventually decrease by half. Thus the government unilaterally imposed a sales tax to reduce the budget deficit on 3G auction licenses.

The lower-income sector argued that they have lost their chance to update their communication tools, saying the added tax is more on opposition, especially to the business sector, for not being able to maximize their profit-making.

This short-sighted decision does increase their burdens, they said, and adds to the problems of the telecom sector and hurting the reputation of the PML-N.

Despite all odds, Pakistanis still experience affordable call rates in the entire region. However, the days of affordable communications may seem to be over, and might lead them to get back to traditional means.