ACCORDING to the 2024-25 statistics, approximately 50 per cent of Pakistan’s total population, equivalent to 120 million adults, are non-filers. Out of these 120 million adult individuals, only 5.8 million are active tax filers, representing less than five per cent of the adult population. This indicates a significant gap in tax comp-liance, with the vast majority remaining non-filers. To address this issue and enhance government revenue while promoting financial transparency, there should be urgent, effective policy reforms.

Every adult citizen of Pakistan — male, female and transgender, working or non-working, from all walks of life, and everyone who attains the age of 18 years on June 30 — should file income and wealth tax returns, declaring all his/her local and foreign income as well as moveable and immoveable assets in Pakistan and abroad.

This measure will ensure that financial transactions are properly recorded, and that individuals’ income and assets are transparently documented. It will also foster a sense of legal and financial confidence among citizens, who will be secure in the legitimacy of their holdings.

By bringing all adult citizens into the formal tax system, the government will gain comprehensive understanding of the financial standing of individuals, allowing better assessment and correlation of declared income with owned assets. While many individuals may initially file nil returns, this act of compliance will still convert them into active filers, paving the way for them to participate fully in economic activities and contribute to a culture of responsible citizenship.

To encourage broad-based participation and sustained compliance, the government should introduce tangible incentives for filers, such as expedited legal and judicial services, free education up to 12 years, free healthcare, free life insurance, social welfare, free access to parks, and provision of civic facilities.

By aligning public benefits with tax compliance, the government can build trust and create a virtuous cycle: the more citizens become filers, the more revenue is generated.

The bottom line is that all income and all assets must be declared accurately in all the annual income and wealth tax returns.

Muhammad Abdus Samad
Islamabad

Published in Dawn, May 29th, 2025