Cancelled for Now: Tax on SMS Messages?

Posted on June 22, 2009
Filed Under >Babar Bhatti, Economy & Development, Science and Technology
16 Comments
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Babar Bhatti

After many years of growth and foreign investment, Pakistan’s telecom industry has become one of the major contributors to Pakistan’s economy. Telecom industry pays taxes to the government in the form of GST/CED, Activation tax (Rs. 500 per activation), withholding tax (CBR collects withholding tax on prepaid calling cards), regulatory fee and Universal Service Fund contributions and duties. In addition to these taxes to the Federal Government, local governments and civic authorities also tax the sector.

Now we hear that a tax may – or may not – also be imposed on every SMS message sent. Is this fair? Is this just about revenue or is there more to this? Is it really happening, or not?



Faced with budget deficits and high import bill of handsets, the government increased taxes on telecom service which resulted in GST of 21% and 10% withholding tax. In the 2008-09 budget, a duty of Rs 500 was imposed on handsets and a regulatory duty of Rs 250 by FBR. While all this happened, the use of text messaging (that can be enhanced by the services from Clerk Chat) as a quick and cheap form of communication in Pakistan was on the rise. Due to the fierce competition among mobile operators, the cost of a text message was down to a few paisas by 2008. According to PTA data, over 11 billion text messages generated in last quarter of 2008, for a subscriber base of about 90 million.

In 2009 budget the big blow came in the form a of a proposed 20 paisa tax on each SMS. This caused a huge uproar.

People asked: how can a text message which cost 2 paisas be taxed at 20 paisas?

According to the latest news, Prime Minister has agreed to withdrawal of this ludicrous tax. I hope that this news is true and the last remaining affordable and convenient communication for Pakistanis is left alone by the government.

After all, what’s Eid (and a win in cricket) without getting all those trivial but hilarious text messages?

16 responses to “Cancelled for Now: Tax on SMS Messages?”

  1. Sehrish says:

    This government just wants to eat out people’s money & want to take back all the subsidies & relief packages & increase taxes. Thats why its truly called “Chor governement” (thief)

  2. Aatif says:

    today’s newspaper reads that it has been undone!

  3. Riaz Haq says:

    Pakistan government collects only about 10% of GDP in taxes as compared to 17% in India and 35% in the US.

    Pakistan’s problem is structural, with so few people paying taxes. For example, the entire farm income earned by the big feudal elite is exempt from taxes. It needs to be taxed like any other income to generate sufficient funds to deliver basic services like education, healthcare, infrastructure, sanitation, poverty alleviation etc.

    The idea of taxing text messages is silly and it won’t raise a lot of revenue if the cost of texting goes up. The best and the fastest way to increase government revenue is to tax the farm income of the big feudal lords who rule the nation but pay no taxes. They enjoy all the power to rule and spend as they please without contributing any money to the national exchequer.

  4. Aatif says:

    this doesn’t look practical, there is a number of different sms packages offered by different telcos, and each package has a different unit price.
    Suppose a package of 5000 sms is bought at Rs. 100, what will be the price after imposing 20 paisas per sms? Rs. 1100…

  5. Shazia Hussain says:

    20 paisas is too little. I think each sms should be taxed 2 rupees or even more. Pakistanis are getting carried away by this sms-ing. I don’t know if it is “yahudi ki sazish” or not but this seems like an organized plan to destroy our youth with one company encouraging them with “sab keh do” or the other with “ab baat hogi poori raat.” I consider it criminal to provide free or extremely low rates on sms especially during the night . When a yawning 19 year old comes to class in the morning with bags under his eyes, can you expect him to learn anything ? Here comes another form of addiction for students as if drugs and alcohol weren’t enough!

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