Telecom companies and other stakeholders of the industry yesterday slammed the spike in supplementary duty on mobile data usage, calls and any service that requires a SIM card.
The finance minister in Thursday's speech announced 15 percent supplementary duty, a significant rise from last fiscal year's 10 percent. The decision came into effect yesterday.
Even Telecom Minister Mustafa Jabbar said the decision would thwart the process of "digitalisation" of services.
Industry insiders said the government was hoping to earn over Tk 1,000 crore in addition to the previous revenue from the sector. But the goal might not be achieved, because people are likely to limit their usage to avoid paying the extra.
"People are going through a difficult time, and we need to think about the times when we increase taxes on essential services like this… I think we needed a little more foresight," Minister Jabbar told this correspondent about the additional supplementary duty.
Top executives of different operators also said people would rather curb usage than spend more. People would use apps to make calls more often and save their spending on voice calls, they added.
Association of Mobile Telecom Operators of Bangladesh (AMTOB) in a statement said the move would place an unbearable burden on poor people.
Due to the pandemic, people's dependence on phones has multiplied, said AMTOB General Secretary SM Farhad, adding that the burden of such taxes would not be good for the economy which is becoming more reliant on digital services.
"It will be detrimental to the 'Digital Bangladesh' vision. The sector will be weakened and damaged further."
Banglalink CEO Erik Aas said subscribers were already paying a lot in taxes.
"The additional tax on telecom services will especially affect the less privileged consumers, and this in turn will limit their ability to participate in the digitalisation of Bangladesh," Aas said.
He urged the government not only to withdraw the decision, but also to suspend VAT on the mobile data usage, considering the economic impact of the pandemic.
Hossain Satad, director and head of public and regulatory affairs at Grameenphone, said, "Such a decision will also be unfavorable to unlocking the possibilities of Digital Bangladesh."
The market leader also urged the government to reconsider the decision.
Shahed Alam, chief corporate and regulatory officer at Robi, said even before the new budget was proposed, Tk 53 out of every Tk 100 spent for mobile services were going to the government exchequer.
"Hence, adding 5 parentage points SD on the already ultra-heavily taxed telecom sector will only bring further misery for the customers. A large part of the population had become reliant on digital communication during the pandemic to remain connected. Raising tax will certainly cause an adverse impact on this trend."
Rashad Kabir, a director of Bangladesh Association of Software and Information Services, termed the government move suicidal.
Incremental tax on digital service will definitely create a hurdle on the road to digitalisation, he said.
"We expect that the government will reconsider it, because the people are having a hard time and they are now more dependent on digital services," said Kabir, also the managing director of Dream71, a leading software company of the country.
The government has been increasing taxes on all kinds of mobile services for the last few years. In the fiscal 2014-15, the total tax paid by users was 15 percent. With the new hike, the tax would be 33.25 percent.
As of March, there are 16.53 crore active mobile connections in the country. Of them, 9.52 crore are connected to the internet, according to Bangladesh Telecommunication Regulatory Commission.
Annual revenue from the market currently stands at around Tk 25,000 crore.