Government of Punjab, through a SRO — also known as mini budgets — has imposed 19.5% tax on internet services over 2Mbps and for bills exceeding Rs. 1,500 per month, starting tomorrow.

With this, over 56 percent population of Pakistan will be liable to pay service taxes on internet usage for 3G, 4G, broadband, EVO or anything internet communication with speeds exceeding 2Mbps or/and if the monthly bill for their service exceeds Rs. 1,500 per month.

And this is going to get implemented straight away, starting May 29th, 2015.

Below is the copy of SRO according to which the tax exemption, that was earlier granted to internet services, has been withdrawn.

This Tax will Kill The Industry

I feel pity for Anusha Rehman, Ishaq Dar and Nawaz Sharif with their tall claims for efforts that they had made for auctioning 3G and 4G.

Just this morning Anusha Rehman — at an event — wasted more than 30 minutes in explaining how government is supporting 3G/4G and entrepreneurship in the country; the fact is that this government has decided to kill it all.

Considering the high growth rates of internet users in Pakistan, all the planned investment, worth billions of dollars, will be routed to other market and Pakistan will be destined for the stone age again.

Interestingly, this ruthless decision came just a week before the budget so that Balochistan gets enough time to get its sheets right and impose similar taxes on internet usage.

Just to recall, KPK and Sindh provinces are already charging service taxes on internet usage, however, tax in both the provinces in on conventional Internet and not on mobile data. Also imposition of tax on all kind of internet by Punjab — that houses than 56% of Pakistani population — is simply fatal.

Industry’s Response

Telecom service providers are speechless at the development. When I called them up to record their responses, they were clueless, scattered and worried. Sheer amount of depression has caught up the market because it knows the damage this tax is going to do to people, businesses and the country.

One thing they are clear about is to reject this tax. While they are uncertain about the way of rejecting it, but they have apparently decided to not play in the hands of the government.

They said that Pakistan waited for more than 5 years to launch 3G and 4G, and now when conditions are just about to settle down, this tax is going to take us back to where we had started.

Just in case if you don’t know, Pakistan’s internet penetration is lowest in the region.

One official of a telecom company commented:

“It is such a shame that politicians, who prefer their personal pockets over national economy, are such short sighted that they preferred killing the internet industry, eCommerce, m-banking, entrepreneurship and almost entire economy for meeting budgetary deficits.”

Another top level official, said:

This tax has shocked the industry. Telecom companies didn’t invest more than $1.5 billion dollars in Pakistan for 3G and 4G just to face 20% tax on internet.

What to Do Now?

ACT. Respond to this tax by raising your voice, on all available and possible platforms. Call up TV stations, radio stations and express your concerns. Take it to Facebook, and express your feelings. Call up your influential friends and ask them to play a role.

You have to do it now, right now!

We are updating this story in real time.