Report flags rising pressure on compliant taxpayers in Pakistan

ISLAMABAD: Senior Journalist and anchorperson Kamran Khan has highlighted a growing imbalance in the tax system of Pakistan, saying that tax-compliant citizens, especially salaried individuals and documented businesses, are increasingly carrying the financial burden while a large segment of the informal economy continues to operate outside the tax net.

In his program On My Radar on ARY News, he said the country’s weak economy and slow growth have raised concerns about whether the upcoming budget will bring any real relief for honest taxpayers or simply increase pressure on the already compliant class.

He also pointed out uncertainty over the federal budget schedule, noting that even the final date of its presentation remains unclear, which has added to public concern about overall fiscal planning.

Kamran Khan said repeated reliance on a narrow tax base has resulted in constant pressure on salaried individuals, whose tax contribution has increased sharply over the past few years in Pakistan. He noted that despite being fully documented, this group continues to face rising tax rates, while much of the informal sector remains outside the system.

He further highlighted that Pakistan’s tax structure remains complex and difficult to navigate, discouraging wider compliance. In comparison to simpler international systems, he said Pakistan’s tax filing process is still lengthy and complicated, limiting participation from potential taxpayers.

The report also raised concerns over the Federal Board of Revenue’s performance, pointing out that revenue targets have been revised multiple times but collection gaps continue to persist. Analysts believe this reflects deeper structural weaknesses in the tax system rather than short-term shortfalls.

Another key issue highlighted was the increasing dependence on petroleum-related levies, which now form a major source of government revenue. This indirect taxation, he said, ultimately places an additional burden on ordinary citizens and businesses through higher fuel costs.

Also Read: IMF pushes Pakistan to withdraw more tax concessions in upcoming budget: sources

Exporters are also facing liquidity challenges, with significant refunds reportedly stuck, affecting cash flow and investment capacity in the export sector.

Kamran Khan suggested that instead of repeatedly increasing pressure on the documented sector, Pakistan needs broad-based reforms, including simplifying tax returns, reducing rates, and expanding the tax net to include the informal economy.

He warned that if the upcoming budget continues to focus only on short-term revenue targets, it may provide temporary fiscal relief but will fail to address long-term issues such as growth, investment, and job creation.