Increased telecom taxes hamper digital inclusion

The recently announced mini-budget came with some unexpected tax revisions for the telecom sector. The news has caused distress amongst stakeholders who have raised their voices against these taxes claiming that such decisions will not accelerate but hamper the country’s progress towards its vision of a ‘Digital Pakistan’

Under the Finance (Supplementary) Bill 2021, taxes on digital gadgets, such as smartphones and laptops, were raised. These new taxes have impacted the buying power of the common man even more which will make it hard for a greater part of the population to participate and contribute towards the digital revolution that the government has been advocating for.

The tax revision for the telecom sector came just a few months after the announcement of the budget for 2021-22 under which the government reduced the advance tax and promised a further 2% reduction in 2022. The relief had been earned after years of advocating and evidence-based requests on behalf of lower-income part of the population but unfortunately, it was withdrawn within a few months. This will affect millions of subscribers that don’t have a stable income and are otherwise not in any tax bracket.

The telecom companies have invested a lot of money so far contributing $622.5 million to the total FDI in Pakistan but such initiatives by the government will only increase uncertainties regarding the policies. In order to encourage further investment and digital penetration, the government has to think about the implications of such decisions so that we are able to actually achieve the Digital Pakistan vision.