18 per cent sales tax increase on mobile phones rejected

ISLAMABAD: The Senate Finance Committee rejected a proposal on Saturday to impose an 18 per cent sales tax on mobile phones priced up to Rs55,000 and above.

Saleem Mandviwala chaired the Senate’s standing committee on finance. The committee convened to discuss the proposal of imposing sales tax on mobile phones and unanimously rejected it.

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During the meeting, member Anusha Rahman argued against the proposed tax. She stated that mobile phones should not be classified as luxury items. The former telecommunications minister expressed concerns that taxing phones priced above Rs55,000 would inevitably increase consumer prices.

Rahman also pointed out potential economic impacts, noting that mobile phone prices could skyrocket if the tax were imposed following budget discussions.

The Senator echoed concerns raised by the International Monetary Fund (IMF) about the tax burden on lower-income segments of Pakistan. She warned about the broader implications of taxing essential communication tools like mobile phones.

Taxing phone calls, charging services, and even mobile phones themselves may deter investment and innovation in the telecommunications sector.

The rejection of the proposed tax supports efforts to maintain affordability and accessibility of mobile technology, important for education, and business purposes among the masses.

In recent years, Pakistan has struggled with economic challenges exacerbated by the Covid-19 pandemic and global economic fluctuations. The country has witnessed a 50 per cent year-on-year inflation rate, causing widespread hardship and fears of starvation among its population of 240 million.

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Amid these discussions, stakeholders in the telecommunications industry have advocated for policies that promote digital inclusion and access to technology.

They argue that taxing essential communication tools could impede efforts to bridge the digital divide and lessen digital literacy among marginalised communities.