Higher telecom taxes reducing adoption

ISLAMABAD: Higher telecom taxes are discouraging consumers and companies which is resulting in reduced adoption that is detrimental national productivity, a business leader said Sunday.

According to a study, a price increase of 1 percent leads to a decrease in consumption by consumers of ICT goods and services of anywhere from 0.2 percent to 3.8 percent, said Patron Islamabad Chamber of Small Traders Shahid Rasheed Butt.

He said that according to the World Bank, every 10 percent penetration of broadband contributes 1.38 percent to GDP but this is ignored in Pakistan where telecom industry of is dying under burden of taxes. Pakistan’s telecom sector is second highest taxed in the world which has discouraged investors resulting in lower 3G and 4G penetration and dramatic drop in direct foreign investment, he said.

Shahid Rasheed Butt said that DFI plummeted by 72 percent for the fiscal year ending June 30th, while the telecoms industry contributed 50 percent less in taxes compared to the previous year. He said that biometric subscriber verification that resulted in overall connection numbers dropping by 18 percent while it cost telecom industry 60 million dollars.

He said that cell phones and mobile internet is important tool to reduce poverty therefore policymakers should consider providing relief to telecom industry reeling under heavy taxation.