WEB DESK: The government’s recent proposal to introduce an 18% tax on mobile phone units has sparked significant concern among various stakeholders in Pakistan.
The proposal has raised worries about its potential impact on mobile phone affordability and the broader mobile phone industry in the country.
Industry experts warn that this move will make mobile phones more expensive, disproportionately affecting low-income individuals. For many Pakistanis, smartphones are not just a means of communication but essential tools for their livelihoods. For instance, Bykea riders and other gig economy workers rely heavily on affordable smartphones to earn a living.
The proposed tax could hinder new entrants from purchasing smartphones, potentially affecting their ability to work and earn income.
Currently, Pakistan assembles around 95% of its mobile phones locally, thanks to zero tariffs on SKD and CKD units. This local assembly has been crucial in keeping mobile phone prices relatively low and accessible.
Read More: Govt considers stopping monitoring of milk, beef, and mutton prices: Report
However, high duties on raw materials have already stunted the development of the local mobile components industry. Introducing an 18% tax on SKD and CKD units could exacerbate these issues, making it even more challenging for local manufacturers to thrive and innovate.
The timing of this proposed tax is also a cause for concern. Pakistan is transitioning to higher technologies such as 3G and 4G, yet approximately 40% of mobile users in the country still rely on 2G phones. In contrast, developed countries have 70-80% of their populations using 3G, 4G, or 5G phones. The proposed tax could slow down this technological transition by making newer, more advanced phones less affordable for the average consumer.
Furthermore, the government already collects substantial revenue from taxes on SIM cards, suggesting alternative ways to generate income without placing an additional financial burden on consumers. Experts recommend exploring these avenues instead of increasing taxes on mobile phones, which are essential for communication and economic participation.
1 Comment