ISLAMABAD: The World Bank has emphasized that the only sustainable way to reduce the financial burden on Pakistan’s salaried class is by broadening the tax base and ensuring that all income streams are brought into the tax net.
Speaking at a conference titled “Charting Pakistan’s Fiscal Trajectory: Enhancing Transparency & Trust”, World Bank representatives and policy experts stressed the urgent need to reform Pakistan’s tax structure by integrating informal sectors, digitising tax administration, and enforcing equitable taxation across income groups.
Tobias Haque, the World Bank’s Lead Country Economist, welcomed the provincial implementation of Agriculture Income Tax (AIT) and called for accurate documentation and taxation of the property sector. He highlighted that short-term tariff rationalisations may offer temporary relief but are damaging long-term revenue prospects.
“Only 5 million people file tax returns in a country of 240 million — this is absurd,” Haque said. “Pakistan’s tax system is deeply inequitable, and as long as the bulk of revenues are extracted through regressive mechanisms like the General Sales Tax (GST), the burden on the salaried class will remain unfair.”
He stressed that digitisation and comprehensive documentation of incomes and transactions are essential to expand the tax base and relieve pressure on fixed-income earners.
Dr. Nadeem Javaid, Vice Chancellor of the Pakistan Institute of Development Economics (PIDE), raised concerns about corruption in development spending, claiming that up to 40% of funds are lost in commissions. “No bill is cleared without a 5% to 7% cut going to the Accountant General Pakistan Revenues (AGPR). This is an open secret,” he stated.
Dr. Ali Salman, Executive Director of the Policy Research Institute of Market Economy (PRIME), pointed out inefficiencies in the current taxation framework. “There are 88 types of withholding taxes, yet 45 of them bring in less than Rs1 billion annually. We need clarity and simplification,” he argued, noting that the Federal Board of Revenue (FBR) collects Rs1.2 trillion through withholding taxes each year.
Panelists unanimously agreed that Pakistan’s taxation system remains outdated, with digitization hindered by political inertia, legal gaps, and institutional resistance. They called for end-to-end digital integration, real-time data access, and automated workflows to modernize tax administration and restore public trust in the system.
