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Tuesday Jun 29 2021

Telecom operators say collection of proposed tax on voice calls 'unimplementable'

A representatonal image. Photo: File
A representatonal image. Photo: File

  • FBR will have to "sniff through" billions of call records and minutes, say telecom operators. 
  • Additional tax on voice call exceeding five minutes will shrink revenue of telecom sector, they say. 
  • Proposed tax to have adverse economic impact on most vulnerable sector of economy, say telecom operators. 

LAHORE: Pakistan's telecom operators Monday rejected the government's proposed tax of Rs0.75 on voice calls exceeding five minutes, stating that it is impossible to collect such a tax. 

In a letter addressed to IT and Telecom Minister Aminul Haq, telecom operators stated that major disruption and damage to the service model structure of the sector will be caused if the government forces the tax upon operators. 

Implementation of proposed levy in telcos billing is almost technically impossible, says the letter seen by The News.

“This levy will be unimplementable and will result in withdrawal of free minutes and bundles which are used by the majority of our customers,” it said. “More than 90% of voice minutes are consumed through bundles, so if this facility is consequently withdrawn and normal rates are charged to the customers, their call rates will go up by multiples.”

“Forcing this tax on subscribers will lead to fundamental changes in consumption behaviours, which will lead to shrinkage of the industry’s revenue base (possible shifting of voice revenues to over-the-tops) and potentially erode other taxation revenue streams of the government of Pakistan,” said the letter.

The letter said that the auditing of the revenue stream will have its own set of complications, as each call record will have to be analysed and audited.

Saying that it will be "practically impossible", telecom operators said it would entail that the FBR will have to "sniff through" billions of call minutes/records to audit the same.

The telecom sector said the additional tax will, once again, put financial stress on the masses. 

“We are talking here of migrant workers and daily wagers who are living long distances away from their homes and the mobile telephone call is the only form of economical communication which they can afford with their family/loved ones,” said the letter.

They said the tax would have an adverse economic impact on the vulnerable section of the society, the same the government claims to protect. 

“As you would be aware, the poor strata of our society, which constitute most of our subscriber/consumer base, are already paying more than their due share of taxation, through withholding tax as well as general sales tax and federal excise duty on calls,” said the letter.

“Facilitating the growth of the telecom sector aligns with the government’s national development and economic objectives. It is our earnest view that the tax relief measures approved by the federal cabinet shall further bolster the government’s efforts towards achieving inclusive economic growth, creating new jobs, digitization of economy to transform Pakistan into a knowledge economy and therefore such regressive taxation proposals taxing the common man using voice calls for connectivity need to be withdrawn accordingly,” it added.

“We are quite confident that both of your good selves would clearly see the unintended consequences of this proposed levy, especially on the poor, and once again withdraw the proposal for good. We are very hopeful that your continued patronage will stimulate industry stability and a delegation of our CEOs would look forward to meeting with you both at your earliest convenience to further discuss the same accordingly,” said the letter addressing IT Minister Haq.