The systems of countries are run by tax revenues. Be it defense needs or construction of structures, prosperity schemes or public welfare measures, everything requires money.

 Capital is required for every aspect of life, including education, health, research. To obtain this capital, there are many issues, including collection of taxes, planning of their expenditure on various items, which are focused on to provide peace, employment, necessary facilities to the people and put the country on the path of development. Unfortunately, the dear homeland is surrounded by such a vortex of economy, from which the current government is working day and night to reform the situation in every sector.

At a time when the preparation of the budget for the new fiscal year 2025-26 has begun, accurate statistics related to every sector are of particular importance for planners.  While tax returns depict the income that the government receives from the assets and income of the people and is later spent. Of the total 5.9 million returns received by the FBR in the current fiscal year, 43.3 percent (2.6 million) individuals said their taxable income was zero (NIL), while only 3,651 individuals declared their taxable income to be more than Rs 100 million.  A morning daily, citing official figures, revealed that the number of high-net-worth individuals was not high as only a few thousand individuals had taxable income of more than Rs 100 million in their latest income tax returns filed during the current fiscal year.

According to a statement recently made by FBR Chairman Rashid Mahmood Langrial before a sub-committee of the National Assembly, only 12 individuals have declared wealth of Rs 10 billion in their tax returns.  These figures indicate that either tax evasion is taking place on a large scale or the number of high-net-worth individuals in the country is very small. The total number of tax filers during the current financial year 2024-25 is 5.9 million, which includes 5.8 million individual tax filers, 104,269 Association of Persons (AOPs) and 87,900 companies.  The number of filers in the tax year 2023 was 6.8 million, while in the year 2022 it was 6.3 million, which is significantly lower than the estimated number of potential filers of 15 million.

There are at least 300,000 industrial electricity connections across the country, but the FBR has received income tax returns from only 87,000 companies. The FBR has concluded from the analysis of the situation that by eliminating the category of non-filers, a new category is being introduced which will determine who is “eligible” or “ineligible” to enter into a transaction, for example, to buy a property worth Rs 10 million or to buy new cars.  The logic of this conclusion is clear. A person who is able to buy expensive properties like the richest people, own expensive cars, own properties abroad and maintain the standard of living of the richest people must have enough income to pay taxes.  Tax evasion is considered a serious crime all over the world, and in our dear homeland too, there is a need to close all avenues for tax evasion and bring those who provide false information for tax evasion to justice. The experiences, laws and methods of developed countries should be utilized to take Pakistan on the path of stability and prosperity.

Today, the alienation of the people from the state has reached its peak and if the poor class is not immediately freed from the burden of taxes, then all the dreams of transforming Pakistan into a welfare state will remain unfulfilled. For this, it is necessary that Pakistan will have to make fundamental changes in its tax system, in which first of all, landlords, tribal chiefs, stock brokers and housing builders will have to be brought into the tax net. The FBR system will have to be digitalized and the culture of paying taxes will have to be promoted. On the other hand, financial experts say that Pakistan's tax system has been continuously increasing the tax burden on the salaried class for 77 years now because this class is the easiest target for state institutions.  However, in this regard, FBR Chairman Rashid Mahmood Langrial has revealed that the top 5% of the highest-earning elite in Pakistan is evading taxes worth Rs 1.6 trillion.  On the other hand, the FBR itself has also made the tax system very confusing. First, the terms tax filer and non-filer were introduced, then late filer and now the terms eligible filer and non-eligible filer have been added to it.  Earlier, non-filers were threatened with disconnection of electricity and telephone, and now the new amendment bill includes a ban on buying large vehicles and property, opening bank accounts, buying shares, and also a clause to seal their businesses. 

This clearly shows that there is no strong tax system in Pakistan. According to economic experts, the biggest flaw in the current tax collection system is the burden of indirect taxes on the poor. According to a report, currently, seventy percent of tax collection is being collected indirectly, while the remaining 30 percent is being met through budget deductions from salaries.  In comparison, direct taxes are the largest source of revenue in developed countries. For example, in developed countries, the average tax on personal income is 23.4 percent of total tax revenue, while in Asia-Pacific countries, its rate is 10.4 percent.  About 16 percent and very low in Pakistan. It is being shown at the government level that the new amendment bill will help reduce the deficit of Rs 7.1 trillion in tax collection next year.  In addition, according to an announcement by the FBR, notices have been issued to 169,000 influential people so that they can be brought into the tax net. 

According to the FBR chairman, despite tax reforms, 2.7 million people are still outside the tax net. Keeping these difficulties in mind, the Finance Minister wants to increase the tax-to-GDP ratio from the current 9.2 percent to 13 percent, which seems incomplete. Pakistan's agricultural sector, which provides 27 percent of the GDP and forty percent of Pakistan's labor force is associated with this sector.