Shawdesh Desk:

Telecom sector industry stakeholders said that the decision to increase the supplementary duty on mobile phone services by 3 per cent would hinder progress and widen the digital divide.

They noted that the additional burden would create disparities between rural and urban people.

The National Board of Revenue has recently decided to increase the supplementary duty on mobile phone services from 20 per cent to 23 per cent.

An official of the revenue authority on Wednesday confirmed to the New Age that a notification in this regard will be issued soon.

‘The proposal was approved in an advisory council meeting recently. The notification will be issues after completion of further approvals,’ the official said.

Bangladesh Mobile Phone Consumers Association in a written statement said that while 48 per cent of the country’s population was still outside the internet service, this new high tax rate would divert citizens from internet service and create new inequality.

‘Thousands of people gave their lives in the July-August student-led revolution to establish accountability, democracy and fair public service. But the current authorities are taking money out of the pockets of the people to provide state funds forgetting the issue of social responsibility,’ it said.

Currently, the SD on mobile phone services is 20 per cent, the value added tax is 15 per cent and surcharge is 1 per cent.

The government now charges Tk 54.50 when a customer recharges Tk 100 adding SIM tax, revenue sharing and other taxes in addition to the taxes aforementioned.

As a result of the SD increase, more than 56 taka will go to the government treasury for a top up of Tk 100.

The increase in tax on mobile phone services meant that people in villages would have to pay the same tax rate as people in cities. Moreover, the cost of urban people is comparatively less as they use various internet-based apps to communicate.

The rate of smartphone usage among rural people is low. The global organisation of mobile operators, GSMA, said in a report last October that only 26 percent of mobile phone users in rural Bangladesh use smartphones. The rest use feature phones, which are known as button phones.

The government has taken the initiative to increase taxes on mobile phone services at a time when inflation is over 10 per cent.

Operators say that mobile phone and internet users are declining due to the cost of living, the economic situation and other reasons.

Sharfuddin Ahmed Chowdhury, head of communications, Grameenphone, said, ‘At a time when the economy is still recovering, this additional burden will pose significant challenges for consumers already struggling with daily expenses.’

‘If SD is increased, this will be the second time in last seven months which would hinder progress and widen the digital divide,’ he said.

Shahed Alam, chief corporate and regulatory officer of Robi Axiata said, ‘Prior experience suggests that such increases in duties never fulfill the Government’s overall objective of boosting revenue. This is because general consumers reduce their expenses to cope with the shock of rising service costs.’

He urged the National Board of Revenue and the government to reconsider this decision.

Taimur Rahman, chief corporate and regulatory affairs officer of Banglalink said, ‘The government’s decision to raise the supplementary duty on mobile services from 20 per cent to 23 per cent is expected to increase costs, impacting customer affordability amid rising inflation.’

‘Just a few months ago, the supplementary duty was raised from 15 per cent to 20 per cent in the last budget, which already posed challenges for both customers and the industry. Moreover, this move could widen the digital divide, hinder sector growth, and reduce government revenue,’ he added.