Amidst the economic challenges faced by the mobile industry due to high taxes and import restrictions, the government is contemplating the inclusion of budget proposals submitted by mobile phone traders.
According to a report from private media, the Federal Board of Revenue (FBR) is exploring options to reduce the duty on mobile phones in the upcoming federal budget for the fiscal year 2023-24, expected to be announced on June 9.
Previous Duty Increase Yields Disappointing Results:
Previously, the government was compelled to increase the duty on mobile phones by 100% to 150%, resulting in a deposit of only Rs5 billion to Rs10 billion in the national exchequer instead of the anticipated Rs85 billion. The number of mobile phone users in Pakistan has surpassed 186.9 million.
Significant Reduction in Duty Rates Considered
To address the financial crisis, the new budget is considering a significant reduction in duty rates on cell phones, which currently range from 100% to 150% for both small and large devices. The burden of increased taxes has pushed the mobile industry to the edge of collapse, affecting not only traders but also hindering the livelihoods of millions of people.
Traders’ Recommendations Under Review
A delegation from the Mobile Phones Traders Association has presented recommendations to Finance Minister Ishaq Dar and other senior officials, who have assured the delegation that efforts will be made to incorporate these recommendations into the budget. The proposals and recommendations are currently being reviewed for inclusion in the new budget.
Discrepancies in Duty Rates Compared to Other Countries
It has been observed that Pakistan imposes a 75% duty on cell phones, compared to other countries in the region like Singapore, Bangladesh, and Turkey, where duty rates are not as high. Consequently, people are using smartphones without paying duties, often with the connivance of the FBR.
Impact on Affordability and Society
The additional 100% to 150% duty on cell phones has made them unaffordable for the poor, laborers, daily wage earners, students, professionals, the legal community, and civil society.
Concerns of Smuggling and Tax Evasion
Munir Beg Mirza, the General Secretary of the All Pakistan Mobile Phones Traders Association, highlighted that the ban on importing used mobile phones has led to increased smuggling, favoring a few companies. Furthermore, people are illegally using smartphones without paying substantial taxes, resulting in a loss for the national treasury.
Importance of Appropriate Duty Implementation
Mirza emphasized that appropriate duty implementation in the new financial year would not only ensure that every consumer pays taxes but also generate Rs100 billion for the government instead of the current Rs5 billion from phone-related revenue.