ISLAMABAD: A recent analysis has pointed to growing pressure on Pakistan’s tax-compliant citizens, with salaried individuals and documented businesses increasingly shouldering the country’s tax burden while a large informal economy remains outside the tax net.
According to Beyond Time News, senior journalist and anchorperson Kamran Khan highlighted these concerns during his program On My Radar on ARY News, raising questions about the fairness and sustainability of the current tax structure.
Narrow Tax Base Raising Concerns
Kamran Khan noted that Pakistan’s limited tax base has resulted in a disproportionate burden on salaried individuals, who continue to see rising deductions despite already being part of the documented economy.
He said this imbalance has intensified in recent years, as formal taxpayers contribute a growing share of national revenue while large segments of the informal sector remain largely untaxed.
Uncertainty Over Budget Planning
The report also pointed to uncertainty surrounding the upcoming federal budget, including confusion over its final presentation date. This, according to analysts, has added to concerns about fiscal planning and policy direction.
Kamran Khan questioned whether the upcoming budget would offer meaningful relief to compliant taxpayers or further increase financial pressure on the same group.
Complex Tax System Discouraging Compliance
The analysis highlighted structural weaknesses in Pakistan’s tax system, describing it as complex and difficult to navigate compared to simplified international models.
Experts believe the complicated filing process continues to discourage broader participation, limiting the expansion of the tax base and placing additional strain on existing taxpayers.
Revenue Targets and FBR Challenges
Concerns were also raised over the performance of the Federal Board of Revenue (FBR), with revenue targets being revised multiple times while collection gaps persist.
Analysts say this reflects deeper structural issues in the taxation system rather than temporary shortfalls, pointing to the need for long-term reforms.
Dependence on Indirect Taxes
Another key issue highlighted is the growing reliance on petroleum-related levies as a major source of government revenue.
According to the report, such indirect taxation increases the cost burden on ordinary citizens through higher fuel prices, ultimately impacting both households and businesses.
Export Sector Faces Liquidity Issues
Exporters are also reportedly facing financial pressure due to delayed tax refunds, which is affecting liquidity and limiting investment capacity in the export sector.
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Call for Broad-Based Reforms
Kamran Khan stressed the need for structural reforms instead of continued reliance on the documented sector. He suggested simplifying tax returns, reducing rates, and expanding the tax net to include the informal economy.
He warned that if upcoming budget measures focus only on short-term revenue generation, they may provide temporary relief but fail to address long-term challenges such as economic growth, investment, and job creation.
Conclusion
The analysis underscores a growing concern among economists and analysts that Pakistan’s current tax framework places an uneven burden on compliant taxpayers. Without broad-based reforms and expansion of the tax net, experts warn that fiscal pressure on the documented sector is likely to continue.
