Taxing access

TELECOMS  

In a country where mobile phones are not just tools of communication but gateways to education, finance and opportunity, the Pakistan Telecommunication Authority’s (PTA) aggressive taxation on imported devices raises fundamental questions about fairness, efficiency and sustainability.

Today, paying over Rs150,000 in duties for a mid-range smartphone is not only economically irrational, but also structurally self-defeating. These policies are not building a digital Pakistan but isolating it.

The government’s justification for these taxes hinges on reducing imports, protecting the current account and encouraging local manufacturing. But on the ground, these goals have collided with harsh economic realities. As Farooq Sattar pointed out in a recent National Assembly session, the policy is regressive, exclusionary and ultimately counterproductive. His argument -- that a lower, more rational tax would yield broader compliance and higher revenue -- is not a populist plea; it is grounded in economic and fiscal logic.

At present, the PTA’s Device Identification Registration and Blocking System (DIRBS) often demands more in taxes than the price of the phone itself. A smartphone retailing abroad for Rs120,000 may carry a PTA tax of Rs90,000 or more. For students, freelancers, low-income families and young professionals, those most reliant on mobile access to survive in the virtual economy, this pricing model acts as a wall, not a welcome.

The consequences of this exclusion are troubling. More users are turning to unauthorised methods to bypass PTA registration: rooting devices, using Wi-Fi-only features, purchasing unregistered or joint-venture (JV) phones, or simply going offline altogether. Not only does this deepen the shadow economy and deny the state its due revenue, it also introduces significant and under-discussed national security concerns.

Rooted phones, being unofficial and untraceable, cannot be tracked through official channels. This makes them attractive tools for anyone seeking anonymity, including those engaging in criminal or subversive activity. In an age where digital surveillance plays a critical role in law enforcement and counterterrorism, a policy that drives millions into using untraceable devices is not only economically reckless, but it is also dangerous.

The tax regime’s unintended consequences don’t end there. According to the Pakistan Bureau of Statistics, mobile phone imports have dropped sharply over the past fiscal year. The government might interpret this as progress toward self-reliance, but the reality is far more complex. Pakistan lacks the manufacturing infrastructure, technological capacity, and global certifications needed to produce high-quality smartphones at scale. As a result, consumer choice is shrinking, and the market is flooded with outdated, lower-quality devices.

This doesn’t just limit consumer freedom, it undermines Pakistan’s vision of digital inclusivity. The state cannot sell the dream of a ‘Digital Pakistan’ and then effectively lock out large segments of the population from the very tools required to participate in it. Smartphones are no longer aspirational devices; they are basic infrastructure, just like electricity, water or the internet.

If the PTA capped high-end smartphone taxes at, say, Rs15,000 to Rs20,000, millions of previously excluded users would likely register their devices

Even from a revenue standpoint, the current model fails. Taxing a narrow group of legal imports at exorbitant rates doesn’t yield significant income. A more reasonable, broad-based policy would do better. If the PTA capped high-end smartphone taxes at, say, Rs15,000 to Rs20,000, millions of previously excluded users would likely register their devices. The volume of new registrants could more than offset any perceived losses from lower per-unit taxation.

Other countries offer valuable lessons. Malaysia and Turkey, with similar economic structures, have implemented moderate import tariffs while simultaneously investing in local assembly and innovation. The result: increased compliance, wider access and no need to punish users through taxation. Pakistan, with a rapidly growing youth population and a deepening dependence on mobile-based services, would be wise to learn from such examples.

While some critics caution that reducing taxes might encourage luxury consumption or shrink state revenue, this perspective overlooks a key principle of effective taxation: compliance is closely tied to perceived fairness and feasibility. People typically evade taxes not out of defiance, but because they find the burden disproportionate or the system opaque. Excessive or arbitrary taxation breeds informal markets and erodes public trust.

On the other hand, streamlining tax structures and lowering rates can make compliance more attainable for a broader population, which in turn can expand the tax base, increase overall revenue and enhance the state’s credibility. Rather than promoting irresponsible consumption, a well-calibrated tax policy fosters economic participation and voluntary cooperation with state institutions.

There are also cultural and diplomatic costs to consider. The current system discourages overseas Pakistanis from gifting phones to family members, something that once informally bolstered local access to newer technology. Tourists and short-term visitors now avoid bringing electronics altogether, fearing unpredictable PTA charges. This creates a quiet rupture between the diaspora and the homeland, making connectivity feel like a penalty, not a privilege.

The path we are on now leads to a market defined by limited, low-quality devices, a thriving black market and a population increasingly disconnected from global technological trends. If not corrected, it will deepen inequality, foster evasion, and turn technology from a national asset into a gated commodity.

This points to a larger truth: our tax policy must evolve in line with social, economic and technological realities. Smartphones are no longer luxury items; they are essential tools for communication, education, employment and financial inclusion. Treating them as if they were designer goods reflects a deeper disconnect between governance and the lived needs of the population.

Reforming the PTA taxation regime is a matter of national development and digital survival. If Pakistan is serious about building a truly connected, secure and inclusive society, it must stop treating access like a privilege and start recognising it as a right.

The path forward demands clarity, fairness and foresight instead of fiscal overreach disguised as strategy.

The writer is a law student.