PAKISTAN’s taxation system increasingly relies on the easiest taxpayers rather than thefairestones.The FederalBoard of Revenue (FBR) has collected nearly Rs1.9 trillion through electricity bills over the lastfouryears, burdeninghouseholds, salaried employees and small businesses regardless of whether they are liable to pay income tax. Instead of broadening the tax base, the state has turned electricity bills into an instrument of compulsory tax collection.
This approach clearly reflects a deeper structural failure. Agriculture, much of the retail sector, real estate and large parts of the informal economy remain lightly taxed or remain outside the tax net, while compliant citizens continue to shoulder an ever-growing fiscal burden. Such policies reward tax avoidance and penalise those who cannot escape withholding taxes and indirect levies.
A taxation system perceived as unfair ultimately weakens public trust and voluntary compliance. History, from Ibn Khaldun to Adam Smith, teaches us that sustainable taxation rests on equity rather than convenience. Governments must tax according to the ability to pay, not merely on the basis of its ability to collect.
Pakistan does not need more taxes hiddeninside utility bills.Itneeds rather comprehensive tax reforms that expand the tax base, reduce reliance on indirect taxation, and restore fairness to the relationship between the state and citizens.
Dr Zafar Khan Safdar Islamabad