The Development Surcharge and Levy Act 2015 was cleared in Monday’s regular Cabinet meeting chaired by Prime Minister Sheikh Hasina.

The one percent surcharge will be imposed on the amount charged on users by mobile phone operators for its services, said Cabinet Secretary Muhammad Musharraf Hossain Bhuiyan.

The new law will be effective once the Parliament passes it, he told reporters after the meeting.

“The Cabinet has approved a proposal under this law to impose one percent surcharge on revenues collected against services provide through SIM or RIM cards,” said Bhuiyan.

He said the move will generate an additional Tk 1.4 billion in revenues for the government, which would be spent on education and healthcare.

The government has traditionally levied surcharges when it wants to raise money for a certain purpose. During the construction of the Jamuna Bridge, surcharge was levied on bus and train and cinema tickets.

The budget for the current FY 14-15, however, did not propose to impose a surcharge on mobile-phone use.

Finance Minister AMA Muhith had opted levying 15 percent VAT, up from the existing 10 percent, on the import of mobile phones to “help the local industry flourish”.

During the budget discussion, Prime Minister Sheikh Hasina had sought review of some tariffs and proposed the imposition of surcharge on mobile-phone use.

She had then told the House that funds raised from this surcharge would be spent on education and healthcare.

The finance minister included Hasina’s suggestion in the Finance Bill-2014, though the details were not laid out then.

After that, the National Board of Revenue (NBR) proposed one-percent surcharge and forwarded it to the finance ministry.

In September last year, the issue was raised during a Cabinet meeting and the Secretary had then said that the move would materialise and a circular would be issued.

"NBR has shown that mobile-phone users spend on an average Tk 200 every month. The surcharge therefore will be Tk 2 per month," Bhuiyan told reporters then. "So users will pay only an additional Tk 2 a month, but the government will earn Tk 1.4 billion in a year."

According to the telecoms regulator, BTRC, there are 110 million mobile-phone connections in Bangladesh, although they do not all stay active at the same time.