Review of duty and taxes on SIM card and mobile sets
Thursday, 3 September 2009
THE government, according to a report published the other day in this paper, might soon review the duty and taxes levied on mobile phone sets and subscriber identity module (SIM) cards in the budget for the current fiscal year. The finance ministry has decided to give a second look at the tax issues following requests from the mobile phone operators and the ministry of science and technology to this effect. The reasons behind pressing for an appropriate cut in taxes by the cell phone companies and the technology ministry are, obviously, different.
The cell phone companies are mainly concerned about their business growth and turnover and the concern of the ministry is about increasing mobile phone penetration among the low-income people. The Tk. 800 tax on SIM card has been the main stumbling block to the efforts of the cell phone companies to net new subscribers belonging to the low-income section of people, in both urban and rural areas. Thus, telecom sector has experienced a sluggish growth for more than a year, which would naturally result in a decline in tax revenue receipts by the government from the mobile phone companies. So, a careful assessment of the gains and losses on account of the enhanced duty and taxes on mobile phone sets and SIM cards will be required on the part of the ministry of finance, before taking a fresh decision.
What has guided the technology ministry to seek a review of the duty and tax structure, possibly, is the government's avowed goal of digitizing Bangladesh as early as possible. It does not need any elaboration that the mobile phone is the most easily available and the cheapest information technology (IT) tool that can be used widely to carry messages to the vast majority of the population, including those living in the countryside. Bangladesh at the moment has one of the lowest rates, around 1.0 per cent, of Internet access. With 40 per cent of the population still remaining below the poverty line and low literacy rate, it would take many more years to ensure wider access of the population to Internet facility. Until that happens, the government and the people can make the best use of mobile phones to disseminate and receive necessary information.
On its part, the government would be inclined to making efforts for maximum possible revenue collection from any sector. But that should not be at the cost of natural growth process of the targeted sectors. The greater care needs to be exercised in the case of sectors that are contributing more to the country's economic growth and capacity building. Here, the mobile phone companies deserve particular attention since they have helped the country to achieve a tele-coverage of the population well beyond the target set in the national telecommunications policy and have created an alternative delivery channel for better service delivery. One particular cell phone company has already taken Internet facility to some selected areas of rural Bangladesh and its rivals might soon follow suit. Besides, all the cell phone companies are making available the Internet facility to their respective subscribers. The usage rate, which is considered a bit high, is likely to come down soon as has happened in the case of call rates. Under the circumstances, any reduction in the existing duty and taxes on mobile phones and SIM cards might produce positive outcomes in the government's revenue earning and also in the efforts for ensuring greater access of the people to ICT.
The cell phone companies are mainly concerned about their business growth and turnover and the concern of the ministry is about increasing mobile phone penetration among the low-income people. The Tk. 800 tax on SIM card has been the main stumbling block to the efforts of the cell phone companies to net new subscribers belonging to the low-income section of people, in both urban and rural areas. Thus, telecom sector has experienced a sluggish growth for more than a year, which would naturally result in a decline in tax revenue receipts by the government from the mobile phone companies. So, a careful assessment of the gains and losses on account of the enhanced duty and taxes on mobile phone sets and SIM cards will be required on the part of the ministry of finance, before taking a fresh decision.
What has guided the technology ministry to seek a review of the duty and tax structure, possibly, is the government's avowed goal of digitizing Bangladesh as early as possible. It does not need any elaboration that the mobile phone is the most easily available and the cheapest information technology (IT) tool that can be used widely to carry messages to the vast majority of the population, including those living in the countryside. Bangladesh at the moment has one of the lowest rates, around 1.0 per cent, of Internet access. With 40 per cent of the population still remaining below the poverty line and low literacy rate, it would take many more years to ensure wider access of the population to Internet facility. Until that happens, the government and the people can make the best use of mobile phones to disseminate and receive necessary information.
On its part, the government would be inclined to making efforts for maximum possible revenue collection from any sector. But that should not be at the cost of natural growth process of the targeted sectors. The greater care needs to be exercised in the case of sectors that are contributing more to the country's economic growth and capacity building. Here, the mobile phone companies deserve particular attention since they have helped the country to achieve a tele-coverage of the population well beyond the target set in the national telecommunications policy and have created an alternative delivery channel for better service delivery. One particular cell phone company has already taken Internet facility to some selected areas of rural Bangladesh and its rivals might soon follow suit. Besides, all the cell phone companies are making available the Internet facility to their respective subscribers. The usage rate, which is considered a bit high, is likely to come down soon as has happened in the case of call rates. Under the circumstances, any reduction in the existing duty and taxes on mobile phones and SIM cards might produce positive outcomes in the government's revenue earning and also in the efforts for ensuring greater access of the people to ICT.