Breaking: Punjab Government withdraw Taxes Imposed on Internet

A recent news in Lahore confirmed that Punjab Government has decided to withdraw taxes imposed on internet. Taxes withdrawals on internet were declared in today’s budget Speech by Dr Ayesha Ghaus, FINANCE Minister Punjab, in Punjab Assembly. She also added that Punjab government has finalized to not to tax internet in the province.

On 28 May 2015, using an SRO Punjab Government had imposed 19.5% taxes. Taxes were applicable on all kinds of data comprising DSL, 3G, 4G, EVDO, WiMAX, FTTH, etc. from May 29th, 2015. It was scared that other provinces can pursue Punjab by TAXING all kinds of internet, including mobile data.

Punjab’s decision for internet taxing met with great criticism through industry and consumers alike. Stakeholders raised different statements against the taxes and concerned the provincial government of the monetary losses that national economy can face because of internet taxes.

Digital publishers also raised voice against the taxes and blacked out their websites in protest against the said TAXES.

Leading websites including UrduPoint.com, Ilmkidunya.com, Siasat.pk, HamariWeb.com, Comics by Arsalan, The News Tribe, Pak Hungama, NetMag, Pakistan Tech News and dozens of other websites and internet celebrities joined the campaign and kept their home-screens black in protest against internet TAXES. All protesting digital publishers and bloggers declared the quick stoppage of black-out campaign.

CHAIRMAN Pakistan Telecommunication Authority, Dr. Ismail Shah, also rejected the taxes and played a role in convincing Punjab government for taking back the TAXES.

ICT3, a think tank on telecom, through its president Sohaib Sheikh, also played a vital role in raising the concerns of the industry.

Taxes turnaround on internet will act as a catalyst for internet uptake in the country. No need to declare internet users grew 500% during past one year and this development is likely to sustain for at least next three years.

Punjab decision to take back the internet taxes will discourage any future efforts from federal and other provincial governments for taking the internet.

Source

Punjab Planning for Internet Taxes can Cause National Economy Up to Rs. 200 Billion in Losses

It is accepted at wide level that broadband services and infrastructure give to economic growth and job creation. As a result, several governments have done the development and usage of broadband services a policy priority. There are different researches to proof that 10% increase in internet diffusion can boost a country’s GDP from 0.1 to 1.5 percent, with best level influences found in developing market like Pakistan.

Last year in April 2014, Broadband subscription in Pakistan reached to 3.4 million before the auction of 3G/4G licenses, and now with-in one year of 3G/4G services we have 15 million 3G users. It means a whooping 15 million enhancement in broadband subscription either 8.33% saturation in the country. Therefore it can be drived that Pakistan’s GDP did growth around 1 to 1.4% during the previous year.

According to PLUM Research titled “Economic and Social Benefits of 3G in Pakistan”, Pakistan would be adding Rs. 40 billion to its economy due to this increase in internet penetration during first year of auction. Multiple effects could add another Rs. 1,000 billion to the economy in next five years.

This research can be finding in Google with keyword “Plum Economic and Social Benefits of 3G in Pakistan”. One can move on and study it to get info as how broadband penetration can support Pakistani economy. According another update Punjab will avail 2-3 billion through taxes against several billions in potential because of slowness in 3G/4G uptake.

On the other hand with recently declared taxes on internet, it is predicted that this uptake in Broadband subscription will thrust by 20-25%. This slowness will be caused due to increased data rates plus sluggish network roll-outs and future investment in technology up-gradation from cellular operators. According to an estimate it will take the economic lose till Rs. 200 billion (20 percent of Rs. 1,000 billion gain as proven above) due to these taxes.

Additionally this is just not the money, it is the job— over 900,000 of them that Anusha promised at the time of auction while citing the same PLUM research — a lot of e-health, e-education, e-banking, e-farming and other development projects that we won’t be able to do just due to taxes.

To enhance the user interest currently the Pakistan users profits is rotating around or less than Rs. 26 billion per year. However, Punjab already has 56% of cellular subscribers, total tax collection from data services (at 19.5%) isn’t going to cross Rs. 2.5 billion per year. Another billion or two from fixed segment and other forms of internet (WiMAX, EVDO, FTTH etc.)

Punjab has Imposed Taxes up to 19.5% Taxes on 3G/4G Internet Users

Government of Punjab has recently declared tax prices for the internet services over 2Mbps and for bills exceeding Rs. 1,500 per month, starting tomorrow.

With this policy more that 56% population of Pakistan will be liable to pay service taxes on internet usage for 3G, 4G, broadband, EVO or anything internet communication with speeds exceeding 2Mbps or/and if the monthly bill for their service exceeds Rs. 1,500 per month. The government will start implementation on this policy from 29th May 2015.

Here is the details of SRO according to which tax is implemented that was earlier settled to internet services has been withdrawn.

This Tax will Kill The Industry

I feel pity for Anusha Rehman, Ishaq Dar and Nawaz Sharif with their tall claims for efforts that they had made for auctioning 3G and 4G.

Just this morning Anusha Rehman — at an event — wasted more than 30 minutes in explaining how government is supporting 3G/4G and entrepreneurship in the country; the fact is that this government has decided to kill it all.

Observing the revolving high growth rate of internet users in Pakistan, all the appropriate investment, worth billions of dollars, will be retreated to other market and Pakistan will be ordained for the Stone Age again.

Interestingly thus callous decision appeared a week ago before the budget announcement so that Balochistan gets sufficient time to get its sheets right and force similar taxes on internet usage.

Just to have a reminder, KPK and Sindh provinces have already imposed the charges service taxes on internet consumption while tax in both the provinces in conventional internet and use on mobile data. Also tax implementation on all types of internet by Punjab that houses than 56% of Pakistani population is just lethal.

Industry’s Response

Telecom service operators have no words for this development. When it was supposed to manage their record and responses, they were clueless, worries and scattered. An absolute depression has caught up the market as it is aware of the damage tax is going to do to people, country and businesses as well.

One thing is clear to reject this tax. However they are unsure about the source of rejecting it but they have finalized to not to play in the hands of the government.

“They said that Pakistan waited for more than 5 years to launch 3G and 4G, and now when conditions are just about to settle down, this tax is going to take us back to where we had started.”

One official of a telecom company commented:

“It is such a shame that politicians, who prefer their personal pockets over national economy, are such short sighted that they preferred killing the internet industry, eCommerce, m-banking, entrepreneurship and almost entire economy for meeting budgetary deficits.”

Another top level official, said:

This tax has shocked the industry. Telecom companies didn’t invest more than $1.5 billion dollars in Pakistan for 3G and 4G just to face 20% tax on internet.

What to Do Now?

ACT. Respond to this imposed tax by raising your voice, on all the existing platforms so millions of people can get awareness of it. Call the media, TV channels, radio stations and describe your concerns and opinions.