The Federal Board of Revenue (FBR) is considering options to reduce the duty on mobile phones in the upcoming federal budget for the fiscal year 2023-24. This move comes in response to the suggestions put forth by Pakistan Mobile Phone Traders. By addressing the current duty structure, the government aims to increase revenue collection while supporting the mobile industry. This article explores the potential impact of reducing mobile phone duties and the benefits it brings to various stakeholders.
1. The Need for Reducing Mobile Phone Duties
1.1 Current Duty Structure
Previously, the government had increased the duty on mobile phones by 100% to 150%. As a result, the national exchequer only received Rs5 billion to Rs10 billion, significantly lower than the expected Rs85 billion. The burden of these high duties has adversely affected the mobile industry, causing financial strain on traders and limiting access to affordable smartphones for the general population.
1.2 Growing Mobile Phone User Base
With a staggering 186.9 million mobile phone users in Pakistan, it is essential to address the financial crisis caused by the high duty rates. This calls for a comprehensive review of the duty structure to alleviate the burden on consumers and support the growth of the mobile industry.
2. Proposed Reduction in Duties
To combat the financial crisis and stimulate the mobile industry’s growth, the new budget aims to propose a significant reduction in duty rates for cellular phones. Currently, duties range from 100% to 150% on both small and large mobile phones. By considering a conspicuous reduction in these rates, the government intends to make smartphones more accessible and affordable for the general public.
3. Impact on the Mobile Industry and Society
3.1 The Struggling Mobile Industry
The mobile industry in Pakistan is teetering on the edge of collapse due to the burden of high taxes. This not only affects traders but also hampers the livelihoods of millions of people who rely on the industry. By reducing duties, the government can provide a much-needed boost to the mobile industry, leading to increased investment, job creation, and economic growth.
3.2 Accessibility for All Socioeconomic Groups
The additional 100% to 150% duty on cell phones has rendered them unaffordable for the poor, laborers, daily wagers, students, professionals, the lawyer community, and civil society. Lowering these duties will bridge the accessibility gap, allowing individuals from all socioeconomic backgrounds to benefit from the technological advancements offered by smartphones.
4. Recommendations and the Way Forward
A delegation from the Mobile Phones Traders Association has submitted recommendations to Finance Minister Ishaq Dar and other senior officials. The government is currently reviewing these proposals to incorporate them into the new budget. By aligning with the recommendations and imposing appropriate duties, the government can ensure fair revenue generation and discourage illegal practices, such as smuggling and tax evasion.
The reduction of duties on mobile phones in the upcoming federal budget has the potential to revitalize Pakistan’s mobile industry while increasing revenue for the government. By making smartphones more affordable and accessible to all, the government can bridge the socioeconomic divide and empower individuals across the country. It is crucial for policymakers to carefully consider the recommendations put forth by stakeholders to create a favorable environment for both the mobile industry and the general public.