Internet Taxes by Punjab can Cause National Economy Up to Rs. 200 Billion in Losses

It is widely accepted that broadband infrastructure and services contribute to economic growth and job creation. As a result many governments have made the development and use of broadband services a policy priority.

There are various researches available to prove that 10 percent increase in internet penetration can boost a country’s GDP from 0.1 to 1.5 percent, with high impacts found in developing market, such as Pakistan.

Broadband subscriptions in Pakistan were just 3.4 million in April 2014 before the auction of 3G/4G licenses, and now with-in one year of 3G/4G services we have 15 million 3G users. Which mean that a whooping 15 million increase in broadband subscription or 8.33% (of total 180 million population) increase in internet penetration in the country.

Consequently, it can be drived that Pakistan’s GDP grew around 1 to 1.4 percent during the last year only.

According to PLUM Research titled “Economic and Social Benefits of 3G in Pakistan”, Pakistan would be adding Rs. 40 billion to its economy due to this increase in internet penetration during first year of auction. Multiple effect could add another Rs. 1,000 billion to the economy in next five years.

This research can Googled by using keyword “Plum Economic and Social Benefits of 3G in Pakistan”. You can go ahead and study it to know more about how and in what manner broadband penetration can help Pakistani economy. 

Punjab will gain mere 2-3 billion through taxes against several hundred billions in potential losses due to slowness in 3G/4G uptake

However, with recently imposed taxes on internet, it is estimated that this uptake in broadband subscription will plunge by 20-25%. This slowness will be caused due to increased data rates plus sluggish network rollouts and future investment in technology up-gradation from cellular operators.

Which means, our national economy can potentially lose up to Rs. 200 billion (20 percent of Rs. 1,000 billion gain as proven above) due to these taxes.

Moreover, its just not the money, its the jobs — over 900,000 of them that Anusha promised at the time of auction while citing the same PLUM research — a lot of e-health, e-education, e-banking, e-farming and other development projects that we won’t be able to do just due to taxes.

Interestingly, if you are wondering, currently the data revenues of Pakistani cellular companies stand around or less than Rs. 26 billion per year. Since Punjab has 56% of cellular subscribers, total tax collection from data services (at 19.5%) isn’t going to cross Rs. 2.5 billion per year. Another billion or two from fixed segment and other forms of internet (WiMAX, EVDO, FTTH etc.)

This figure is going to go further low when we exclude those customers with less than Rs. 1,500 bills and less than 2Mbps speeds.

So the final equation is that Punjab will gain mere 2-3 billion against several hundred billions in losses in five years.

We are hoping that sanity will prevail, and soon too.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK