In its 2005-06 budget (Khaleda Zia) the Bangladesh government imposed a regressive Taka 900 tax on each SIM that was issued. We describe the tax as regressive because, if it was passed on to customers, it would hurt the low-user segment (generally the poorer segment) of the market more, because it’s a fixed tax that does not vary with use.
The mobile operators did not quite understand what the government wanted to do and decided to absorb the tax. They made various pleas and protests and got the tax reduced to Taka 800. Finally, in 2008, they decided they had enough and decided to pass on most of the tax to customers. As a result, it is likely that Bangladesh, which is experiencing the highest mobile growth rates in the world, will see a slow down, especially in the rural areas and among poorer people.
If the companies decide to pass on the entire tax to those who wish to obtain connections, they will serve the government’s objectives better. They must understand that the government would much prefer that mobile service remain a privilege of the rich and those who work for the government.