Taxing calls

Pakistan is one of those countries where internal migration is quite widespread. People from rural areas migrate to cities and from one province to another for educational and job opportunities. In this situation, there are millions of families that need to communicate with each other on a daily basis. Mobile phone voice calls have made their lives easier by providing affordable means for talking to each other. But now, the government is imposing a federal excise duty on calls lasting more than five minutes. There are a couple of issues here that need serious consideration by the authorities. Apart from mobile companies objecting to this proposal with a technical angle, the implementation of a Rs0.75 duty on calls will result in undue pressure on ordinary citizens in the country.

The service model of the telecom sector in Pakistan is quite different from many other countries, where there are different dynamics at play. Pakistan’s economy is already under duress and the confidence of investors is something the government should not even think of shaking. The telecom sector has been one of the largest recipients of foreign direct investment and this is so vital for the economy to develop. A forcible levy on voice calls is likely to damage the model of service structure in the telecom sector, with other disruptions as a knock-on effect. This levy could force service providers to withdraw the free bundles of minutes that a majority of common people use.

On one side the government claims to be promoting a 'Digital Pakistan', and on the other it is creating such hurdles that go against the very idea of better digitalization of the economy. The telecom sector has a significant role to play in Pakistan’s economy, any undue strain would cause the sector to think twice before making new investments. To avoid the damaging commercial and technical consequences of this move, the government must reconsider the imposition of this tax. When the revenues of any industry shrink, they have an impact on other sectors too and that may result in contraction of tax income rather than expanding it. More than anything else, though, taking away a poor man and woman's ability to reach out to their loved ones without having to worry about losing too much money is hardly people-friendly.