In the budget of FY2005-06 Finance Minister M Saifur Rahman reduced the import tax of cellphone sets to Tk 300 from Tk 1,500 each.

In his budget speech the minister said, "The demand for mobile phones has been growing steadily over the past few years. The existing duty rate is Tk 1,500 per mobile set at the importation stage.... I propose duty of Tk 300 per mobile set at the importation stage and Tk 1,200 for connection of each SIM card or similar technology at local stage."

High duty on cellphone sets resulted in their smuggling into the country. The finance ministry earlier said the smuggling deprived the government of huge amount of revenue from the sector.

Besides, many ruling party legislators said the masses will be benefited from the reduction.

But the masses are yet to reap the benefit of the government initiative.

However, the prices of cellphone sets still remain the same. The prices of the SIMs (subscriber identity module) or new connections, on the other hand, increased quickly.

The sellers at different city markets told the news agency that the prices of cellphone sets will not come down even in future.

Visiting different markets, it is seen that only the second hand and old sets are being sold at reduced prices.

The Nokia 1100 and 3310 model handsets are sold at Tk 4,100 and Tk 4,000 each. The prices were the same before the budget announcement. The traders said the prices will not come down in two or three months as they already imported enough cellphone sets.

Seeking anonymity a trader at Eastern Plaza, the country's largest cellphone market, told the news agency that cellphone sets are still smuggled into the country.

According to the National Board of Revenue (NBR), the government lost revenue more than Tk 125 core in FY2004-05 due to smuggling of cellphone sets.

Sources at the NBR said some 6,00,000 cellphone sets were imported through proper channel in the last fiscal year and the government earned about Tk 100 crore in revenue.

But according to the NBR officials, the country's five mobile phone operators -- GrameenPhone, AKTEL, CityCell, Banglalink and Teletalk -- gave 15,000,000 new connections (SIMs/RIMs) during the same period against only 6,00,000 imported cellphone sets.

"How it was possible that only 6, 00, 000 sets were sold against 15, 00,000 new connections? Where do the other sets come from? Doesn't it indicate that the subscribers are using smuggled sets?" NBR Chairman Khairuzzaman Chowdhury questioned when top executives of the mobile phone operators met him in mid June.

The NBR chairman said the government earlier had imposed Tk 3,000 to Tk 4,000 tax on each cellphone set. "The mobile phone operators sold connections along with sets and the government used to get the revenue of each set with every new connection," he said.

A couple of years back, the mobile phone operators urged the government to withdraw the provision of selling sets along with the new connections. They said if the government does so, the country's cellphone market will expand rapidly and the national exchequer will get a huge amount of revenue.

"When the government allowed separate sale of sets and SIMs, it was seen that the revenue earnings from cellphone sets import came down sharply," said a high NBR official, seeking anonymity.

He said the NBR reduced the tariff on cellphone sets and re-fixed it at Tk 1,500. Even then the traders considered it high.