Lahore [Pakistan], December 4 (ANI) Pakistan is struggling to meet revenue targets for the current fiscal year, exposing deep structural weaknesses in the Federal Board of Revenue (FBR). Preliminary first-quarter figures for FY 2025-26 show a shortfall of nearly Rs200 billion, highlighting gaps and outdated practices in the tax system, The Express Tribune reported.
The government had budgeted for annual revenue growth of 20.3%, but the FBR has so far achieved only 12.5%, widening the gap between projections and actual collections. Business leaders say this reflects not just administrative failings but policy errors that rely on overtaxing existing filers rather than broadening the taxpayer base.
Syed Mahmood Ghaznavi, chairman of the Pakistan Industrial and Traders Association Front (PIAF), warned the government is “running out of time” to reform the flawed tax model. He said repeated taxation of compliant businesses will not sustain growth and stressed the need to fix massive structural gaps. “Without a fair, broadened base, revenue goals will keep slipping,” he added.
Industry representatives urged the government to incentivise the informal economy instead of resorting to coercive collection methods. They criticised the FBR’s reliance on fragmented, outdated data, which they say leads to poor enforcement and unfair assessments. Textile exporter Kamran Aslam said Pakistan’s tax system is stuck in the past and called for digital, data-driven reforms. He noted that Pakistan’s tax-to-GDP ratio remains among the lowest in the region because policymakers have avoided bold measures to integrate the informal sector, according to The Express Tribune.
Business groups proposed a simplified fixed-tax regime at lower rates to encourage voluntary compliance. They warned that without genuine reform, the IMF’s demands for fiscal tightening could further hamper growth. Pakistan’s revenue shortfall, they say, is not only a fiscal problem but a symptom of state machinery resistant to modernisation, The Express Tribune reported. (ANI)
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