So the government of Pakistan finally started operations to tax the structure for mobile phones being brought in to the country that we all love, Pakistan.Moreover while these taxes have no become part of the Law of Pakistan from sometime now, the PTI Government has taken the all important step to implement this.
So if you are not already aware, well then the tax starts at Rs 4500 for phones which are valued at $50 but the tax has a tendency to go all the way up to Rs 83,000 for phones which are worth about $1500. In addition to that the government has also introduced a cell-phone annual limit which allows one person to bring in only 5 phones annually. As many would expect the new law was met with great outrage from the people of Pakistan. Now we know, it is understandable ti tax these mobile phones in order to counter the problem of the smuggling of phones in to Pakistan and some sort of tax structure is important to be implemented, but I mean, come on we all have to agree on the fact that these taxes are simply to ‘high’ and well instead of increasing the tax amount the government is going to end up killing the method altogether, the method of bringing phones from abroad.
How important is the Internet and Smartphones for Economic Growth?
Wellto answer that a study conducted by a GSM Association shows that;
- Doubling the amount of mobile data used per 3G connection increases the GDP per capita growth by 0.5%.
- A 10% increase in mobile penetration increases a country’s Total Factor Productivity (a measure of economic productivity that reflects a country’s long-term technological dynamism) by 4.2% in the long run.
- Every 10% substitution of 2G for 3G increases the GDP per capita growth by 0.15%.
Moreover these above mentioned positive effects are not just limited to the economy surrounding Pakistan, studies have always shown that as people upgrade from 2G to 3G and from 3G to 4G the employment growth of a country increases simultaneously. So why is this statistic being ignored by the government of the country? Well anyone and everyone would know that the mobile phone penetration helps a country’s economy and further increases the financial state of a country and to top it all of this method also ensures somewhat reduction in the income inequality and poverty and as many of us know that our country is still in a state of economic development, so we have to cash in, in all of the potential we can get. All in all we need smartphones, a higher internet penetration and more data usage to grow as a country. To put it in simple words, we need technology more than technology needs us at the moment.
Why is the Government resorting to desperate measures such as taxing gifts?
Anyone would know that carrying gifts from one country to another one is allowed in almost every country in the globe and well taxing them makes no sense at all. Moreover gifts aren’t technically blocked by Pakistan, with the exception that is the smartphone. So if the Government does want to resort to this certain measure, they need to do so with a certain tax policy for the case!
Taxes are only good as long as they make sense
Now we are not saying that the taxation policy is wrong, certain things need to bechecked and we understand the Government taking such measures, but what wedon’t understand is the thought they put in to implementing such measures, If this process had any semblance of intelligent thought, the lower brackets of smartphones would have been completely tax-exempt. That’s because the lower and middle segment of Pakistan’s society is the most price conscious. Not only that, they are the segment most in need of smartphones and internet connectivity as well.
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The government wants to step in to the 4th Industrial Revolution, but on one hand the government is training free lancers and introducing AI Initiative’s in order to step in to that revolution while on the other hand they have made it almost impossible for the lower and middle class people to even own a smartphone and access the internet at all! The digital divide in the country is already quite stark and these taxes will end up doubling the prices of the entry-level mobile phones. Measures such as these well not help the country develop as a whole, the government of Pakistan needs to understand that.
A ‘Made in Pakistan’ mobile phone policy should be introduced!
Finally,the most natural adverse affect that such policies will have is that people will eventually stop bringing with them any cellular devices at all. If the government is looking to move forward with these unacceptable taxes well they have another thing coming! The country should therefore resort to a ‘Made in Pakistan’ Initiative which should aim to promote the local manufacturing and assembling of the smartphones otherwise people are just going to end up with absolutely no option at all as Pakistan has no locally manufactured smartphones, Even Qmobile is an importer in Pakistan.
Just look at what across the border ‘Made in India’ campaign has achieved.
Here is why the Government decision to Tax Mobile Phone Imports is just wrong!
The “Made in India” campaign, which was launched in 2014, was designed to make India a global leader in manufacturing and design. It made their government an enabler and business partner instead of a stern authority. The country clearly defined “manufacturing” and unleased policies to attract Foreign Direct Investment. The results are clear to see. India has surpassed the United States as the second largest smartphone manufacturer in the world. Four years ago, India had 2 mobile factories. The number now is 120 and they have created over 400,000 jobs according to PM Modi. By 2020, the GDP share of the mobile industry in India’s economy is going to hit 8.2%.
