‘High telecom taxes depress Direct Foreign Investment’

ISLAMABAD: Patron Islamabad Chamber of Small Traders Shahid Rasheed Butt on Sunday said higher telecom taxes were discouraging consumers and companies which was resulting in reduced adoption.

“Pakistan’s telecom sector is second highest taxed in the world which has discouraged investors resulting in lower 3G and 4G penetration and dramatic drop in direct foreign investment (DFI),” he said in a press statement issued here.

He said according to a study, a price increase of 1 percent lead to a decrease in consumption by consumers of ICT (Information Communication Technology)  goods and services of anywhere from 0.2 percent to 3.8 percent.

According to the World Bank, every 10 percent penetration of broadband contributed 1.38 percent to gross domestic product, but this was ignored in Pakistan where telecom industry of was dying under burden of taxes.

Shahid Rasheed Butt said that DFI plummeted by 72 percent for the fiscal year ending June 30, while the telecoms industry contributed 50 percent less in taxes compared to the previous year.

He said that biometric subscriber verification that resulted in overall connection numbers dropping by 18 percent while it cost telecom industry 60 million dollars.

He said that cell phones and mobile internet is important tool to reduce poverty therefore policymakers should consider providing relief to telecom industry reeling under heavy taxation.

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