Cutting Mobile Taxes Could Boost Pakistan’s Economy: Study

New Report Highlights Economic Benefits

A new study by Frontier Economics for VEON claims that Pakistan could strengthen its economy and eventually increase tax revenue by reducing heavy taxes on mobile services.

The report explains that lower telecom taxes could encourage more people to use digital services, helping businesses grow and improving internet access across the country.

Mobile Tax Burden Could Drop Significantly

The study models a plan to reduce the overall mobile tax burden from 37 percent to 17 percent. This would include lowering sales tax on telecom services, removing advance income tax for mobile users, and cutting regulatory duties.

Researchers believe these changes could make smartphones and mobile internet more affordable for millions of users in Pakistan.

Government May Face Short-Term Revenue Loss

According to the report, the proposed tax cuts could initially reduce government revenue by around $439 million.

However, the study notes that this amount equals only about 1 percent of Pakistan’s total tax collection. It adds that stronger digital growth and economic activity could recover the losses over time.

Higher Connectivity Could Support Economic Growth

The report suggests that better internet access and wider smartphone adoption would improve productivity and support digital businesses.

Under the projected scenario, GDP per capita growth in Pakistan could rise from 4.2 percent to 4.5 percent by 2031.

Study Predicts Long-Term Fiscal Gains

Researchers estimate that by 2034, Pakistan could achieve a net fiscal gain of nearly $680 million due to stronger economic activity driven by digital expansion.

The report concludes that reducing telecom taxes may help Pakistan accelerate digital transformation while also improving long-term government revenue.