GSMA CALLS ON PAKISTAN DIGITAL FUTURE
Islamabad – 16 March, 2017:
The GSMA today set out a number of measures that Pakistan will need to take in
order to close the digital divide in the country and reach its Vision 2025
goals. In a white paper prepared by GSMA
Intelligence, supported by Deloitte, it identified that only 47 per cent of the
population subscribe to a mobile service, and only 10 per cent subscribe to a
3G or 4G data service.
Despite the government’s intentions laid out in Vision 2025, it is
forecast that the total number of mobile subscribers will only grow by 5 per
cent by 2020. More worryingly, in a
country where 99 per cent of people rely on mobile to access the internet, up
to 48 per cent of Pakistanis are expected to be without a mobile subscription
in 2020.
A key reason is affordability. In a recent survey of 1000 Pakistanis, 57 per cent who own phones, but don’t connect to the internet, said the main reason was that smartphones are too expensive. 42 per cent said the cost of a data plan was a major inhibitor. For the poorest 20 per cent, owning and using a mobile might cost as much as 20 per cent of their annual income. Government has a major role to play in addressing this problem since 31 per cent of the total costs of acquiring and using a mobile are accounted for by taxes levied by it.
“Mobile Broadband is growing in Pakistan, and the Government is rightly
investing in new networks in rural areas,” said Henry Parker, Public Policy
Manager, Asia Pacific, GSMA. “However,
all citizens must be able to afford to use these networks. Today many cannot.
Prices in Pakistan are already some of the lowest in the world. So to boost uptake,
Government must relieve some of the tax burden it imposes on consumers in the
upcoming budget.”
The GSMA has made three core recommendations for consideration as part
of the upcoming budget. All of them aim to ensure that mobile usage is taxed in
the same way as other goods and services, and that mobile is not singled out
for high rates as if it were a ‘luxury’:
·
Reduce sales
tax/FED on mobile to 17%
Currently
sales tax and federal excise duty (FED) are charged at higher rates (18.5-19.5
per cent) for mobile services than others. The rates should be harmonised at 17
per cent. This would help to make services and phones more affordable for all
levels of society.
·
Abolish
the SIM Tax
The PKR
250 SIM Tax places a cost barrier in the way of acquiring a mobile that is
imposed regardless of ability to pay. It should be abolished.
·
Reduce
Withholding Tax on Mobile to 12%
Mobile
consumers pay more withholding tax than consumers in any other sector. Many
cannot reclaim what they pay as they don’t file a tax return. This tax makes
mobile less affordable for the poorest in society. It should be reduced and
reformed.
“This package of measures
isn’t just good for Pakistani consumers, it would be good for the economy as
well. There is a well-defined link between increased investment, GDP and job
creation through wider user of mobile and investment in networks. Introducing
just one reform, such as reducing sales tax/FED could deliver US$2.8 billion in
additional GDP growth by 2021
EmoticonEmoticon