January 15, 2017 Print

Pakistan has one of the highest tax rates for mobile phones in the world, and an Internet penetration rate of only 14 percent — less than half of India’s rate, and much less still than other countries in the region. Policy Research Institute of Market Economy (PRIME), an Atlas Network partner based in Islamabad, has been running an informational campaign since 2015 to convince the government to sign onto the Information Technology Agreement (ITA) developed by the World Trade Organization (WTO) more than 20 years ago, and a recent PRIME article reports that its efforts have persuaded key officials in Pakistan’s government to sign on to the ITA’s slashing of information technology taxes and tariffs.

PRIME’s campaign began with a presentation to Pakstan’s minister for information technology, followed by a thorough study, “Information Technology Agreement: Why Pakistan should accede,” and a public seminar that drew 53 participants, “including government officials, representatives from [the] private sector, social activists, media persons, representatives from [the] diplomatic community and academia.” Participating speakers from several government and industry trade positions all spoke in favor of signing on to the ITA.

In April 2016, PRIME’s executive director, Ali Salman, wrote a letter to the prime minister’s office requesting that it deliberate on signing on to the ITA. “This request was positively received, and the Prime Minister established a high powered committee to examine Pakistan’s accession to the Information Technology Agreement,” PRIME reports. “Secretaries from Ministry of Commerce, Ministry of IT, Ministry of Industries and Revenue Division including Dr. Manzoor Ahmad, President (Hon.) PRIME Institute are members of this committee.”

The first meeting of this committee brought support for the ITA from all its members, apart from Pakistan’s revenue agency, which fears a possible short-term reduction in information technology tax collections. PRIME notes that “it is quite encouraging that government is now considering” signing the WTO agreement, which would require “complete elimination of tariffs/duties on the IT products covered in the agreement,” PRIME explains.

“If the government decides to join the Information Technology Agreement, it will be a win-win situation for consumers, industry, government and other stakeholders,” PRIME concludes. “Within a short time, there will be substantial gain in tax revenues ($1.9 billion by 2020), new investment in IT sector and more employment generation. This would also help Pakistan move towards a knowledge-based economy.”