WITH the next budget just days away, all eyes are on the additional taxation measures the government proposes to achieve the IMF-mandated primary surplus target of 1.6pc of GDP. Will the government make a credible effort to broaden the tax base by effectively bringing retail, real estate, agriculture, etc, into the net? Will it walk the talk and go after the millions of tax cheaters the FBR claims to have issued notices to in the last four to five years? Or will it further throttle compliant taxpayers, particularly the salaried class and corporate sector, already groaning under a crushing tax burden?

The chances of providing any significant ‘relief’ to salaried individuals — particularly those earning up to Rs100,000 a month — and the corporate sector appear dim, as the tentative tax target of Rs14.1-14.4tr amid rising defence needs and other current expenditures leaves little room for it. The fact that salaried individuals have paid 52pc more tax — Rs437bn — in the first 10 months of this year compared to last year, and that the manufacturing industry, which forms 18pc of the GDP, is contributing nearly 60pc of total tax revenues, shows how inequitable and unfair our tax structure is. Taxing the untaxed segments of the economy, thus, is not merely about raising revenues, it is also about fairness. With Pakistan’s tax-to-GDP ratio of less than 10pc — one of the lowest in the world — the time for business as usual is over. The state can no longer survive without proportionately taxing every taxable income regardless of its source and political clout. The massive tax burden on individuals is forcing talent to leave the country and proving to be a major drag on investment, exports and growth. The budget offers the government a chance to fix the system. This may not be the last chance, but unless availed now, matters might soon get uglier and spin out of control.

Published in Dawn, June 6th, 2025