High taxes that heavily affected the mobile demand

Mini-budget presented by Finance Minister Asad Umar in the National Assembly increased the tax on import of high-end user mobile phone sets.

The massive rupee depreciation over the year and high taxes on cellphones, the import of cellphones curved in 25.06% to $59.8 million in January 2019 paralleled to imports in January 2018 worth $79.8 million, according to the Pakistan Bureau of Statistics (PBS).

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According to the budget, mobile phones were supposed to be charged on the basis of import cost per set, or equivalent cost in rupees in case of supply by the manufacturer.

Parvez Iftikhar, former CEO of the Universal Service Fund (USF) and an international ICT consultant, told in a statement that people having high income changed their cellphones in a year while those with modest income kept cellphones for two years.

In the speech, during the mini-budget announcement, the Finance Minister Asad Umer explained that how the low-valued phones do not experience price rise on account of the demand-supply imbalance and how it is essential to revise the fiscal treatment of imported mobile sets. By introducing a uniform and convenient slabs this measure will make sure that low-end cell phones are charged at a low rate whereas higher taxes are imposed on high-end phones.

Following the currency’s depreciation, around 32% in contrast to the US dollar in the past 13 months, the weakness of the rupee has affected many divisions of Pakistan’s economy and is the major factors behind the drop in mobile phone imports

The costs of mobiles phones have increased, which has limited the demand as people’s purchasing power has already been hit by rising inflation.

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Some companies even float this idea of setting up mobile phone assembly plants in Pakistan and had approached the Pakistan Telecommunication Authority. Although such plans may not work for the assemblers, according to the ICT expert, as the life span of cellphones is very short and local parts will not be available in the country.

There are numerous kinds of taxes imposed on mobile phones comprising different duties, sales tax, additional sales tax, advance tax on non-filers of tax returns and IT tax. Adding to these, provinces have their own taxes.

In order to grow in future we depend entirely on IT and telecom, it includes the growth of broadband, but it is not possible without scrapping the heavy taxes.