GSMA advises Pakistan against new voice call levy

ISLAMABAD: Global telecoms lobby GSMA has warned of negative impact of new voice call levy on Pakistan’s economy and its digital vision, it was learnt on Friday.

“From an operational perspective, the new levy will significantly increase the compliance cost for the government and the mobile sector due to the challenge of implementing such tax,” GSMA wrote in a letter to Finance Minister Shaukat Tarin.

“The new levy would create an additional barrier and slow the progress to close the usage gap. Due to its negative impact on demand and perspective of development for the mobile sector, this new levy creates uncertainty while the mobile sector is planning long-term investment as part of the planned spectrum auction presenting a significant risk for the government achieving digital Pakistan vision,” it said. The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators with over 350 companies. The government introduced a new levy of Re0.75 per voice call exceeding five minutes in the budget for 2021/22. “The late introduction of such levy would negate the aforementioned tax reforms by raising the cost of mobile services, in particular for low-income households,” GSMA said.

Over the last years, the government and the mobile sector have engaged in a dialogue to rethink mobile sector taxation in order to boost Pakistan’s transition to a digital economy.

“The GSMA commends the government of Pakistan for adopting the tax reform measures approved by the federal cabinet,” it said. “We trust that these will support the adoption and usage of mobile connectivity by citizens and businesses and will improve business environment in Pakistan. The telecommunication sector is a key enabler for social and economic growth and these tax reforms will contribute to spread these benefits more widely within society.”

GSMA in the past also raised voice against high spectrum fees and taxes. Mobile connectivity has an economic impact of $17 billion, 5.4 percent of GDP, according to estimate in 2019.

“High fees make it difficult for operators to provide and expand affordable services and impact investment in network infrastructure that benefits the wider economy. The government in Pakistan should not focus on short-term revenue maximisation through raising spectrum fees. The renewal price should takes into account the current market and seek to enable the laudable policy vision and goals in the Digital Pakistan Policy, not further burden operators as they seek to connect the citizens of Pakistan,” it said then. “Spectrum prices and taxes should be set at a sufficiently low level that allows operators to deliver affordable services and deploy mobile broadband widely. We are committed to engage in an open dialogue to help the Government achieve its policy objectives and facilitate sustainable investment in Pakistan’s digital future by all mobile operators.”