IN the two days before writing this column, I had the pleasure of being immersed in a series of discussions in Islamabad on all things related to taxes in Pakistan.
Hosted by the finance ministry and the IMF, the discussions brought together senior practitioners, advisers, and stakeholders for a detailed, high-level debate on what all needs to change in Pakistan’s tax system for it to play a more enabling role in undergirding stability for the private sector and promoting growth rather than being a drag on it.
What struck me during the discussions was the large gulf between the community of experts the IFIs bring to the tax conversation and the people who legislate and oversee the making and implementation of tax policy in Pakistan. The gulf is evident in how they approach the question of tax, the priorities they bring to the table, how they measure success, and the language they use to talk about taxes.
The experts present — sadly, the content of the discussions was “off the record”, so only broad themes can be discussed here — emphasised sustained commitment, balanced compliance, and measuring outcomes, “not activity”. Special emphasis was put on the harmonisation of GST, predictability of policy, and the mutually reinforcing dynamic between various tax heads — for example, how a properly administered GST can help strengthen income tax as well. FBR representatives underlined their tax reform efforts. However, participants still pointed out that the base remains narrow, that withholding plays an outsize role — one of the charts showed how 90 per cent of withholding taxes are collected under 10 heads only — and that this role is increasing. There was broad consensus that Pakistan’s tax system remains inequitable, riddled with “distortions”, and serves more as a drag on growth and investment than as their promoter.
It is surprising how underdeveloped the template governing data disclosure on revenues is.
There is a reason why this is so. The priorities that have shaped Pakistan’s tax system over the years differ from what tax experts suggest it should serve. In Pakistan, raw revenue is the metric of success — and not efficiency, buoyancy, or the self-reinforcing elements of tax administration. Tax policy responds heavily to voice in the system. Over the years, it has evolved along the path of least resistance, so to speak, causing the bulk of the burden of generating new revenue to fall on those with no voice, or the least organised voice, in the system. Even in the section of industry that likes to highlight the quantum of its contribution to the revenue effort, it is highly probable that the bulk of the taxes are passed through to their consumer base rather than being borne by the owners and controllers of capital. Over the years, this course has led to a tax system that is highly regressive, very concentrated, barely buoyant, and heavily reliant on withholding as the basis for its collection.
As participants grappled with the vexing question of tax reform in Pakistan, I felt one modest but concrete proposal might help refocus the conversation on evidence rather than emotion. Given how central the question is to Pakistan’s economic future, it is surprising how underdeveloped the template governing data disclosure on revenues is. The monthly revenue collection data we all see reported in the newspapers is informally taken by reporters from unnamed FBR sources and is often inconsistent.
We only see revenue-collection data when the Fiscal Operations data is released every quarter, but even then it provides only headline numbers, and its release frequency is too low to be useful. One thing that is sorely needed in Pakistan is a more robust, mandatory data release template for the FBR, with monthly frequency at the very least, if not more often.
The IMF should use its access to the highest levels of government to urge that monthly data releases on revenue collection become mandatory for the FBR. The World Bank should offer its expertise to help develop this template, with uniform accounting conventions governing matters such as how to treat withheld refunds and how to break down the releases. Hence, they serve as a meaningful source for discerning the direction of the fiscal outlook during the fiscal year. The government should legislate this requirement and make any necessary modifications to FBR rules to ensure that a dedicated team is always at work within the tax authority, gathering, compiling, and preparing the next data release as per a predetermined schedule.
While we’re at it, let’s also mandate a similar release requirement on the finance ministry on expenditures. Q Block already submits a monthly statement of all expenditures to the IMF, as per the accounting treatment given by the IMF itself. It would be relatively simple to make this public. There is no good reason not to do so. And many participants at the conference did point out that the question of revenue is connected to that of expenditure.
The bad practices that characterise much of Pakistan’s tax system are a symptom of the environment in which tax policy is administered. That environment is riddled with discretionary powers whose sway in the tax bureaucracy is at the root of a lot of what ails the tax effort. The best antidote to discretionary powers is daylight, or transparency. Open a window. Let the light of day shine in the otherwise dark rooms in which the tax machinery is used to operating. Let them grow accustomed to the discipline a regular data-release template brings. Let them answer the questions that will naturally arise once the data starts to flow. And watch the tax conversation find the rails it needs to ride into the future.
The writer is a business and economy journalist.
khurram.husain@gmail.com
X: @khurramhusain
Published in Dawn, October 22nd, 2026