Cash strapped and trying to make a brave face against continuing economic pressures the sitting government has finally given in to the proposal to tax the mobile recharge or mobile cards available in the market. Seen as the most used/consumed service by Pakistanis all over the excise duty on mobile charges reached almost a whopping 25 percent of the complete charge. It meant for every Rs.100 the mobile card user was only getting Rs 75.
The tenure of the just retired chief justice of Pakistan Saqib Nisar saw a break in that rising taxation trend. Through a public interest hearing the taxation regime was done away with. As the result the mobile card users were able to have the complete benefits of recharging the card.
However, the economic manager had other thoughts over the whole arrangement. As per the available information they had already voiced concern that the revenue loss can run into billions, estimated to be in the range of Rs 126 Billion.
Predictably, the government again approached the supreme court for the respite formula which could generate revenue without causing much financial injury to the mobile card user. The formula seems to have bene rejected. A move that prompted the government to relaunch the initiative at the supreme court level.
As things stand, the reasons behind government not shelving the initiative root in the fact that in the absence of any dynamic economic activity, mobile recharge remains the only consumption activity which can be taxed with the hope that it will generate the required revenues.
Government keen to restore excise tax on mobile recharges
Though popular sloganeering by the government suggests that Pakistan is not going to the IMF. Behind the scene the government is repositioning its fiscal measures to silently suit what the IMF is asking.
To fulfill that objective, the government plans to submit another plan to the Supreme Court, hoping that once the bar of tax levy is lifted, enough revenue can be generated to satisfy the IMF conditionalities, especially the reason that the FY20 budget is also approaching and the IMF bailout will also be finalized around the same time.
As things stand, if any such move is around the corner, it will again hit at the very grassroot of the telco sector; this time after the spike in the price of the mobile handset, the recharge will also be in the tax scan. Conclusively, chances of any economic revival seem bleak, to say the least!