Govt mulls over slapping tax on use of mobile phone

ISLAMABAD: While rejecting all major proposals for jacking up tax collection, the PTI government is contemplating upon different proposals to slap tax on usage of mobile over monthly charge of Rs500 per month, jacked up duty on smart phones, luxury cars, tobacco and partial withdrawal of tax incentives for salaried and non-salaried class through supplementary finance bill.The government has also decided lifting ban on purchase of cars up to 1300cc for non-filers and for overseas Pakistanis.Without changing the annual tax collection target of Rs4398 billion, the FBR will mainly focus for bringing administrative improvement in order to achieve the desired tax collection target. “The momentum of tax collection has geared up and now tax collection target of Rs4398 billion can be achieved despite giving more relief in the supplementary finance bill,” said one top official while talking to The News here on Saturday night.About administrative measures, one FBR official said that they were conducting special research on tobacco, sugar, cement and some other sectors to ensure informed decision on taxation issues. The FBR, they said, would strengthen its Research and Analysis wing in months ahead.The FBR’s proposals for increasing rate of additional customs duty, jacking up GST rate for POL products and many others were rejected by the government. If the duty and taxes on pharmaceutical and diagnostic kits increased through schedule 5 then the prices of drugs could further go up so the government could not accept it. On other hand, Ministry of Commerce sent out list of almost 250 to 300 items with the recommendations to slash down or abolish RD on these items.On taxation from tobacco, the FBR has firmed up its proposal that third tier taxation system was resulting into increasing tax collection so there was no need to bring any change in this system at this stage. However, the proposal for increasing tax rate on tobacco should only be considered if it discourages consumption but if it resulted into increasing trends of illicit cigarettes then there is no need to increase tax rates. It will up to the government to increase tax rates or not without changing third tier taxation system.On the proposal of bringing mobile usage into tax net after suspension of advance tax by the Supreme Court of Pakistan, the FBR proposed to slap on usage of Rs500 per month after which the former chief justice explored the possibilities for diverting this amount into dam fund. However, the government now wants to impose Federal Excise Duty (FED) over the consumption of Rs500 load into phone subscribers on per month basis. On the proposal of partial withdrawal of incentives for salaried and non-salaried class, the government is considering to bring down taxable ceiling limit from Rs1.2 million to Rs0.8 million on per annum basis. The proposal of withdrawal of withholding tax on banking transaction for filers is also under consideration.Authorities in Finance and Revenue divisions were making all out efforts to convince that the upcoming supplementary finance bill would be aimed at providing more incentives to the domestic and foreign investors as well as boosting up stagnant exports.With possibility to revise upward the budget deficit target from 5.1 to 5.6 percent of the GDP for the current fiscal year, the government will utilise the fiscal space of 0.5 percent of GDP for the purpose of providing incentives to formal sectors of the economy.When contacted to Ministry of Finance Spokesman Dr Khaqan Najeeb for comments, he replied that the government would introduce investment promotion including measures of ease of doing business in the coming supplementary finance budget. He refused to call it as mini-budget and said that they would propose investment and export promotion packages to Parliament on January 23, 2019.

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