Govt considering slapping tax on mobile usage

ISLAMABAD: While rejecting all major proposals for jacking up tax collection, the PTI government is contemplating upon different proposals to slap tax on the usage of cell phones over load of Rs500 per month, jacked up duty on smart phones, luxury cars, tobacco and partial withdrawal of tax incentives for the salaried and non-salaried class through the supplementary finance bill.

The government has also decided to lift ban on purchase of cars of up to 1300cc for non-filers and for overseas Pakistanis. Without changing the annual tax collection target of Rs4,398 billion, the FBR will mainly focus for bringing administrative improvement in order to achieve the desired tax collection target.

“The momentum of tax collection has geared up and now the tax collection target of Rs4,398 billion can be achieved despite giving more relief in the supplementary finance bill,” said one top official while talking to The News here on Saturday night.

About the administrative measures, one FBR official said they are conducting special research on tobacco, sugar, cement and some other sectors to ensure informed decision on taxation issues. The FBR, they said, would strengthen its Research and Analysis Wing in the months ahead. The FBR’s proposals for increasing the rate of additional customs duty, jacking up the GST rate for POL products and many others were rejected by the government. If the duty and taxes on pharmaceutical and diagnostic kits are increased through Schedule V then the prices of drugs could further go up so the government could not accept it. On other hand, the Ministry of Commerce sent out a list of almost 250 to 300 items with the recommendations to slash or abolish RD on these items.

On taxation from tobacco, the FBR has firmed up its proposal that the third tier taxation system is resulting in increasing tax collection so there is no need to bring any change in this system at this stage. However, the proposal for increasing the tax rate on tobacco should only be considered if it discourages consumption but if it resulted into increasing the trends of illicit cigarettes then there is no need to increase tax rates. It will be up to the government to increase tax rates or not without changing the third tier taxation system.

On the proposal of bringing mobile usage into tax net after suspension of advance tax by the Supreme Court of Pakistan, the FBR has proposed to slap tax on usage of Rs500 per month after which the former chief justice explored the possibilities for diverting this amount into the dam fund. However, the government now wants to impose Federal Excise Duty (FED) over the consumption of Rs500 load onto phone subscribers on a monthly basis. On the proposal of partial withdrawal of incentives for the salaried and non-salaried class, the government is considering to bring down taxable ceiling limit from Rs1.2 million to Rs0.8 million on per annum basis. The proposal of withdrawal of withholding tax on the banking transaction for filers is also under consideration.

Authorities in Finance and Revenue divisions are making all out efforts to convince that the upcoming supplementary finance bill would be aimed at providing more incentives to the domestic and foreign investors as well as boosting up stagnant exports. With the possibility to revise upwards the budget deficit target from 5.1 to 5.6 percent of the GDP for the current fiscal year, the government will utilise the fiscal space of 0.5 percent of GDP for providing incentives to formal sectors of the economy.

When contacted the Ministry of Finance Spokesman Dr Khaqan Najeeb for comments, he replied the government would introduce investment promotion including measures of ease of doing business in the up coming supplementary finance budget. He refused to call it as mini-budget and said they would propose an investment and export promotion packages to Parliament on January 23, 2019.