In a letter to the finance minister Shaukat Tarin and the minister for IT and telecommunication Syed Amin ul Haq, all four cellular operators and PTCL have raised serious concerns over the imposition of the new FED of Rs 0.75 on voices calls exceeding five minutes.
Calling the tax practically impossible to implement in their billing platforms, the operators – including Jazz, Telenor, Zong, Ufone, and PTCL – have called for immediate withdrawal of the regressive tax regime that “runs opposite the Government of Pakistan’s stated agenda and vision of a Digital Pakistan”.
The letter also points to the fact that the IT minister himself had stated in his post-budget press conference that the proposed tax was not approved by the Cabinet and the Prime Minister.
“However, despite that clarification, the Honorable Finance Minister to our utter surprise in his speech in the Senate of Pakistan on 25th June 2021 announced a levy of Rs 0.75 as tax for each voice call exceeding 5 minutes duration,” the letter said.
It added that if implemented, the regressive measure will have numerous unintended technical and commercial consequences in addition to legal implications on a nationwide basis.
According to the operators, any attempt to implement the said tax – which is technically impossible to do on their billing platforms – will cause major disruption and damage to the service model structure of the telecom sector.
“More than 90% of voice minutes are consumed through bundles, so if this facility is consequently withdrawn and normal rates are charged to the customers, their call rates will go up by multiples,” the letter added.
The operators also raised concerns over the potential shrinkage of the industry revenue if the tax is forced on subscribers, which in turn will also erode other taxation revenue streams of the government.
The operators further asked how this new revenue stream which will possibly be audited by FBR that “will need to sniff through billions of call minutes/records to audit the same”.
The letter also highlighted how the proposed levy will put an additional tax burden on the poor and vulnerable section of society. It stressed that the proposed FED will only make basic connectivity more expensive for migrant workers and daily wagers making a living far away from their homes.
“It is our earnest view that the taxation relief measures…will further bolster the government’s efforts towards achieving inclusive economic growth, creating new jobs, digitization of economy to transform Pakistan into knowledge economy,” the letter added.
The representatives of telcos are also set to call on the IT minister today to discuss the complications and the adverse social and economic implications of the proposed FED.