Levy on SMS: cellphone operators to approach government -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Levy on SMS: cellphone operators to approach government

By Kalbe Ali

ISLAMABAD: The government expects to tap Rs100 million daily from the new twenty paisa tax imposed on SMS but the cellular phone companies said it would bring down their revenue as a result of decline in messaging.

They have decided to approach the government to express their concerns over certain measures taken in the budget 2009-10.

According to official data, Pakistan has more than 92 million subscribers, spread over sixty per cent of the country’s area and there are around 500 million SMS traffic in the country daily.

Sources in the industry said that the 20 paisa tax on each SMS would deal a serious blow to SMS users.

“SMS is also the best medium of communication for around 150 million special persons who cannot speak or hear,” said an executive of a leading mobile company adding that many companies have even launched packages offering SMS at even one paisa per SMS.

“But the new tax would jack the rate of SMS,” the executive said adding that the higher cost would result in low usage by the subscribers.

He referred to the report by the Pakistan Telecommunication Authority (PTA) that revenues from the cellular industry declined by around Rs4 billon in 2008-09 after call rates were increased in the last year’s budget, even now the subscribers would reduce their spending on the calls and the SMS, he added.

Sources in the industry said that a high level delegation belonging to five operating mobile phone companies are expected to meet senior government officials in near future to express their concern over the budget.

“In absence of a minister for IT and telecom, it is difficult to say whom the delegation would meet,” said a senior official of a cellular company adding that the new 0.5 per cent turnover tax would have a serious impact on the financial health of the cellular companies. The industry was also concerned over high taxes on the telecom sector, as the general sales tax (GST) on the mobile services was still 19 per cent and the cellular industry had been demanding equal treatment as far as taxation and duties are concerned as the same on all other products is 16 per cent.

“Besides, the subscribers pay ten per cent withholding tax on making mobile phone calls, this mean a person can talk for only Rs71 after loading Rs100,” said another executive adding that the government has to realise that mobile telephony was not a luxury but a basic need of ordinary citizen.

Expressing concerns over the imposition 0.5 per cent ‘Turnover Tax’ on the gross revenues of the company, sources in the industry said that the increased taxation and an additional levy would lead to reduced investments in telecom sector.

Source: Dawn

Date:6/17/2009