The government of Pakistan has doubled the mobile phone’s sales tax for the coming fiscal year 2015-2016, as announced in its recent budget.
While Finance Minister, Ishaq Dar, claims that the new budget and increased tax rates are supposed to benefit the poor people of Pakistan, real statistics suggest otherwise.
According to the budget 2015-2016, the GST of the sale of mobile phones have doubled, meaning the phones will commission taxes of PKR 300, 500 and 1000 at the sale of lower, middle and higher end phones respectively, instead of the former rates of PKR 150, 250 and 500.
These tax rates are exclusive of the other import duties and taxes including Advanced Sale Tax, WHT and Freight that official importers have to pay.
According to More Magazine, a leading mobile phone distribution company’s official claims that according to the new rates, the government will now earn PKR 550 on a PKR 2,550 phone and a whooping PKR 9000 on a PKR 70,000 phone.
This in turn means that the already high mobile phones smuggling rates will peak further as government officially imposes these rates next year.
The monthly import rate of mobile phones had already plummeted to a mere PKR 1.8 million in April 2015, a stupendous 30% decrease from last year’s monthly figure. With increased tax rates, this is likely to decrease further as the smuggling mafia grows stronger and imports mobile phones via existing and new grey channels.
Ishaq Dar has justified this increase in tax rates by claiming that these will only affect the high end phone buyers, while revoking the previously imposed PKR 200 waiver on import duty of all mobile phones. The quoted official counteracted government’s statement by further explaining how the new rates will increase the duty structure to as high as 25% for some cheap mobile phones too.
While the telecommunication and mobile phone companies are working hard to provide their users affordable smartphones and cheap internet rates, the increasing tax impositions by the government of Pakistan are driving their efforts moot. In another news, it was revealed that government of Punjab has introduced a 19.5% tax rate on internet usage in the province.
Added to this, the new tax rates on smartphones will badly affect the existing market and allow illegal mobile phone smugglers to thrive easily.
