Effects of telecom tax increases on prices in Sri Lanka discussed

Posted on September 11, 2007  /  0 Comments


Telecom Analysts are of the view that even though government has imposed a 10 percent tax on usage over the existing 15 percent value added tax, the mobile companies are unlikely to increase prices.
“I don’t think that the four major mobile companies in the country will go for a price hike as there is prospective competition with the arrival of Bharti Airtel by the beginning of the next year. Besides, the industry is growing” said former telecom regulator and industry analyst Professor Rohan Samarajeewa.
He further said that this increase in tax might have a negative impact on people’s usage of mobile phones. “If the levy was imposed the way it was planned, the Rs.50 fixed charge, the impact of it on the industry and the poorer segment of the country would have been horrendous” he said.
“According to one of our studies on the mobile users we have calculated 0.15 elasticity for call charges by the bottom of the pyramid. Therefore if there is an increase in call charges we can assume a certain drop in usage” he further said.

Powered by ScribeFire.

Comments are closed.