ISLAMABAD: Cellular companies were overcharging their subscribers and possibly evading taxes, the Senate Standing Committee on Information Technology and Telecommunication observed on Thursday.

“Cellular companies are charging their subscribers for one minute while giving them airtime of 45 seconds instead 60 without their knowledge,” said PPP Senator Rubina Khalid at a meeting called to discuss tax collection by the government from mobile companies. Other members concurred with this assessment.

PTI Senator Syed Shibli Faraz was the only member who believed that taxes should be higher to discourage users from “talking endlessly over the phone”.

In his attempt to pacify the committee, Pakistan Telecommunication Authority’s (PTA) compliance and enforcement member, Abdul Samad, explained that the issue of lesser airtime was raised for the first time. “An audit will be done and a report will be presented to the members on the matter,” he said.

Ms Khalid also believed that cellular companies were evading taxes on prepaid cards. “For example, cellular companies deduct about Rs15 in tax when a subscribers recharges his/her account with a Rs100 prepaid card. We do not think that deducted amount is going into government accounts.”

Ministry of IT’s Member Telecom Mudassir Hussain explained to the committee members that tax collection was the domain of the Federal Board of Revenue (FBR).

On the other hand, PTA’s Member Finance Tariq Sultan informed the committee that how the FBR was planning to conduct a forensic audit to figure out if cellular companies were evading taxes.

The responses failed to satisfy the committee who argued that the government had no mechanism to tally the deducted amount on prepaid cards against taxes submitted with the government.

USF ‘BEING MISUSED’: The committee members seemed convinced that funds were taken out from the Universal Services Fund (USF) by Finance Minister Ishaq Dar to pay circular debt.

However, Ministry of IT’s Mr Hussain explained that these were used for promoting and spreading telephone services across Pakistan’s underserved, un-served and rural areas, and “not a rupee has ever been withdrawn for any other purpose”.

“The fund is intact. We, in the ministry, cannot buy pencils from this money if we wanted. Not even Ishaq Dar can touch the purpose-specific fund,” he said.

The USF was formed to connect far-off, underserved, and rural areas with telephone and broadband internet services.

Cellular mobile companies contributed 1.5 per cent from their revenues into an account in the Ministry of IT and Telecommunication.

Through an open bidding process managed by USF, a cellular mobile company could utilise the funds to take telephone services to such areas. Around Rs18 billion has been utilised to spread connectivity across Pakistan out of the Rs68bn sitting in the fund.

In 2013, the PML-N government transferred the USF money from commercial accounts into public accounts, which triggered controversy that the funds were being used unlawfully. Senators, especially Ms Khalid, believed that the movement of funds from one bank into another coincided with the payment of circular debt.

PTCL ‘FLAWED’ DEAL: The controversial sale of Pakistan Telecommunication Company Ltd came under question once again, as the committee demanded answers as to why Etisalat had not paid the outstanding $800 million to Pakistan government to complete the deal.

“The sale of this profit-making company was flawed from the start, especially when the government could not fulfil most of its commitments,” said Shahi Syed, the chair of the committee. “My heart goes out to the 40,000 former PTCL employees who have been denied their pensions for many years.”

PTCL was sold to UAE’s Etisalat in 2006 under a privatisation programme of then prime minister Shaukat Aziz.

The committee directed to call the then minister and secretary and others from the Privatisation Commission to answer for the ‘flawed’ deal. It didn’t get satisfactory answers of their questions and Mr Syed announced to call another meeting some time.

He expressed his displeasure that the IT ministry had not implemented recommendations given by the Senate committee.

Published in Dawn, July 24th, 2015

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