Budget Special: Bland incentives for tech.

Back in the old days, we used to have two days dedicated to a mainstream discussion of the economy, just around the release of the annual economic survey and the budget. Half of that was spent on the share of defence in overall expenditure and the meagre allocation to education and health.

While Pakistan's macro uncertainty of the past few years has brought the conversation around the economy into the mainstream, nothing really beats the excitement and rush of these two days especially if one is involved in the media or financial services industry. Even if it's the same cycle of lobbying, promises, lofty targets, shoddy data and wishful thinking.

For now, let's just stick to what the two documents had in store for Pakistan's technology industry which after a healthy 2021-22 was hoping to get more attention from the government.

And it kind of did, with an annexe on the IT sector in the latest Economic Survey. But the publication was nothing short of a disappointment, to me at least, as it hardly shared any new or important data point. Instead, it went on about the usual increase in IT exports or the number of broadband users - stuff that everyone who bothers to read the survey will know by heart.

A smattering of measures for IT may hamper more than help

The budget was mostly a non-event too, with most of the recommendations of the Pakistan Software Houses Association (P@SHA) ignored and in some cases, even going against them. For example, the IT body had proposed the reversal of the tax credit regime, which was introduced last year in place of income tax exemption, for IT and ITeS companies. Instead, the government has proposed that income from the export of computer software and IT/IT-enabled services be taxed at 0.25 per cent.

Given the export proceeds of $2 billion in this category in less than 10 months, and projected to hit $2.8bn by the government by the end of June, a 0.25pc tax would have implied revenues of $7 million or around Rs1.4bn. Also remember that in the last days of PTI, the administration had promised a host of new incentives for the IT industry, including a tax holiday and 100pc forex retention even though the final notification for the same never came.

One area where P@SHA apparently got its wish fulfilled was allocation towards skill development for...