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Question Title Quota , Tax and Tariff

The Case:

               

Cell phone is now considered an important part of human life especially for business activities. In Pakistan, total number of mobile subscribers was 139.11 million up to March 2017. According to Budget speech 2016-17, government of Pakistan accepted the importance of mobile phones in the provision of IT connectivity. Government also realized that this sector was previously heavily taxed. Therefore, it decided to decrease the withholding income tax on cell phone call from 14% to 12.5% and Federal Excise Duty from 18.5% to 17%. In the recognition of increasing importance of smart/android phones, it also decided to decrease the custom duty from Rs.1000 to Rs. 650 per cell phone.

Requirements:

 

In the light of above discussion, logically discuss the effect of this initiative on consumers and producers.

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