Pakistan must Pursue Digital Dividends with High Tax Rates

The amplified use of internet has revealed to have improved entire service delivery, competently and subsequently and has a progressive net effect on the society in general.

Pakistan must Pursue Digital Dividends with High Tax Rates

Though Pakistan stands as one of the few countries that tax IT goods, thus limiting their impending profits. The propagation of world wide web has headed to economic dividends, which the professionals name ‘digital dividends’.

As stated by the World Bank’s World Development Report 2016,

“The absorption of internet and IT technologies by developing countries has been much faster than previous innovations. It took more than 50 years for a large number of developing countries to have access to electricity, but the proliferation of mobile phones took only a few years. Today, internet is considered as part and parcel of the country’s infrastructure and indispensible factor of production.”

The prospective of digital connectivity has led to colossal investments in information and communication technology. In spite of this, there are stern apprehensions that the spreads of digital dividends have not been even.

Still almost half of the population that lives mainly in emerging countries like Pakistan have no access to the internet that has led to a digital rift and rise in disparity.

In many developing countries, policymakers are aware of the element that connecting the digital divide or empowering digital inclusion is imperative in reducing inequity and poverty. This has led to significant interest amongst countries in joining the WTO’s Information Technology contract that has led to rise in the trade of IT products worldwide.

The WTO’s IT contract pledges the cosigners to exclude tariff on IT goods, that would not only assist reduce the price of IT products, but also help surge use of IT for individuals, businesses, and governments.

Pakistan is one of the few exemptions in the developing countries that have not joined the WTO’s IT agreement because of the lack of unanimity amongst investors in removing import tariffs.

Currently the total revenue collected by Pakistan on imposing charges and other taxes on imports subsidizes as much as 45% of federal government’s total revenues.

The universal mobile density is at 95%. In Pakistan the average is almost 62% where there are 125 million mobile phone subscribers out of which 30 million have smart devices connected to 3G services.

The strategy recommendation being promoted by professionals for linking digital divide is to relieve duties and taxes on IT goods and services. Pakistan may not have adequate monetary space to exempt these taxes but there is enough proof to bring it to international means to make services affordable to a greater section of the population.