FPCCI Slammed For Proposing Fixed Tax on Cellular Subscribers

Experts and officials of cellular sector have lambasted proposal of Federation of Chamber of Commerce and Industry (FPCCI) for imposing fixed monthly tax on mobile customers who have been already bearing high taxes on telephony services, terming it a biased approach against foreign investors based on incorrect estimations for generating revenues.

The trade body proposed the government to reduce taxes up to zero-rated for local industries but suggested imposition of new taxes on the sector which is already victim of discrimination and paying high taxes and duties on different accounts.

The apex chamber must offer tax imposition on different sector or deduction of revenues on the products and services of local industry as charity or financial support like Benazir Income Support Fund to low income group in order to alleviate poverty in the country, an official of the leading cellular sector said and added cellular operators will support local industrialists and businessmen to transfer their money through mobile banking.

The proposal is biased idea against foreign companies is illogical and anti-people approach, he said on the condition of anonymity.

The trade body always protects industrialists at large who committed tax evasions and are involved in violating rights of workers, he alleged. “The cellular sector attracted huge foreign investment, created billion rupees revenues, provided employment to thousands of graduates and brought advance technology in the country.”

Overall the users of telephony services have paid Rs 36.35 billion in the July-December 2010 on the account of sales tax at 19.5 percent and withholding tax at 10 percent rate with 11.53 percent growth

Telecom sector is the second highest paying contributor to GST and fourth most sector for generating withholding tax to the national exchequer.

The cellular subscribers are already paying 19.5 percent on telephony services which is highest among all sectors besides tax burden was increased on them in the form of increase in withholding tax to 11.5 percent recently.

Cellular operators have been supporting new customers and paying activation tax from their own pocket for couple of years. It has been done obviously for their own business interest but it also helped people to purchase mobile phone connection for comfortable lives, another official said.

The FPCCI proposal to government for imposing tax translates into devastating of cellular industry with contraction of subscribers base. On the other hand, it is also a proposal to destroy an industry which provides business opportunities to hundreds of small and medium sized entrepreneurs in the form of retail business through out the country, he said on the request to be anonymous.

In 2005-10, the cellular sector contributed significantly in overall telecom sector to attract Rs 6 billion Foreign Director Investment (FID). It also generated Rs 352 billion revenues to the national kitty in terms of taxes

The cellular sector is matchless with any other industry of the Pakistan particularly in the last couple of years, it played a tremendous role to spur economy of the country, he claimed.

FPCCI suggested the government to tax on monthly basis millions of customers that include low income group people, retired employees, widows and students, an expert of Telecom sector said.

The number of cellular phone is not up to 100 million in Pakistan but they are many users who are holding multi SIMs, therefore, the calculation of supreme trade body of the country is absolutely wrong.

There are lot of SIMs that are inactive or reactivated by users with the gap of couple of months besides a significant number of users who are still unregistered and can’t pay tax through proposed system of revenue collection.

On the other hand, millions of subscribers who are possessing more than one connections of different mobile operators are watchman, sweeper, peon and etc. and can’t afford to pay a monthly Rs 100 tax on every SIM ,which is equal to 1,200 per year.

The international principal of economy suggested that tax should be imposed on the basis of their income resources or ability to pay tax, hence, a fixed rate tax from poor to rich users of mobile phone users is not legal and as per rule of economy.

Expert said the cellular sector people are little enraged with the proposal of apex chamber of the country which might be materialized by the government in the coming budget because the sector proved strong enough to bypass previously attempts to ban night call packages demanded by members of two provincial assemblies in the past.

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