Telecom operators reject proposed tax on voice calls

LAHORE: Telecom operators rejected the proposed tax of Re0.75 on a voice call exceeding five minutes, saying its collection would be impossible, it was learnt on Monday.

If the government forces the industry to implement it then it will cause major disruption and damage to the service model structure of the telecom sector, according to a letter by the telecom operators to IT and Telecom Minister Aminul Haq. Implementation of proposed levy in telcos billing is almost technically impossible, said 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 majority of our customers,” it said. “More than 90 percent of voice minutes are consumed through bundles, so if this facility is consequently withdrawn and normal rates are charged to the customers their call rates will go up by multiples.”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 auditing of the revenue stream will be prone to unsurmountable complications as each call record will have to be analysed and audited. “This means the Federal Board of Revenue will need to sniff through billions of call minutes/records to audit the same. How would that be practically possible.”

With the levy, the government will be disproportionately putting additional tax burden on the vulnerable section of the society, causing extreme distress and desolation to them, according to the telecom operators.

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

The proposed taxation on voice calls is regressive, they said. This will impact the low and vulnerable segments of the population the most – the very segment which the government vows 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 taxation relief measures approved by the federal cabinet shall further bolster government’s efforts towards achieving inclusive economic growth, creating new jobs, digitisation 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 meeting with you both at your earliest convenience to further discuss the same accordingly,” said the letter addressing IT Minister Haq.