ISLAMABAD, May 12: The government is likely to abolish Rs500 activation tax on the mobile phone connections in the next budget.

An official told Dawn on Friday that the proposal was made by the cellular phone operators, who were paying major portion of the tax themselves.

It is estimated that with the withdrawal of the tax, the number of users would increase to over 15 million by the next year, the official said, adding that the current subscribers base was 12.4 million.

This means that currently only 8.26 per cent people of the total population are using mobile phones. There is a tremendous scope for growth in the years ahead, he said. The official said rationalisation of the tax resulted in increase of mobile users during the last three years.

The activation tax was reduced to Rs1,000 in the year 2004-05 from Rs2,000. Later, it was further scaled down to Rs500 in the year 2005-06.