The latest budget proposals in Pakistan have raised concerns in the telecommunications sector. The government’s decision to impose a sales tax on mobile handsets below $500 is seen as a substantial setback for the country’s digitalisation efforts and overall connectivity.

An industry official privy to the matter said this move is poised to adversely impact the provision of essential connectivity, pushing Pakistan away from its digitalisation goals and potentially halting progress made in increasing internet usage across the nation.

“The budget proposal regarding the imposition of sales tax on mobile handsets below $500 will adversely impact the provision of essential connectivity, digitalisation efforts and internet usage in the country, pushing it towards the dark ages,” read a Telecom Operators Association of Pakistan (TOA) statement to the media.

It added that the proposal regarding the imposition of 75% advance tax on telecom usage for over half a million persons mentioned in the income tax general order is also unimplementable.

“The Telecom Operators Association of Pakistan urges immediate review of these proposals,” the statement added.

Mobile phones play a crucial role in bridging the digital divide in Pakistan, especially among the lower-income population. The proposed sales tax of 18% on handsets priced below $500 will likely make these devices less affordable for a significant portion of the population.