- By Muhammad Umair Zeb, Finance and Taxation Expert
Pakistan’s tax crisis continues to cast a long shadow over its economic future. With a chronically low tax-to-GDP ratio and repeated shortfalls in Tax Authority targets, the country is caught in a vicious cycle of mounting debt and eroding public trust. Despite digital innovations and policy shifts, the gap between what should be collected and what actually remains alarmingly wide.
To reverse this decline, both federal and provincial governments must adopt bold, structural reforms. It’s no longer enough to chase the already taxed. Authorities must bring the untaxed into the net through documentation of the informal economy, consistent policy enforcement, and most importantly trust-building. Coordination between the Tax Authority and provincial bodies like KPRA and PRA is critical to remove duplication, align strategies, and make compliance easier for all.
Muhammad Umair Zeb, a renowned expert in finance and taxation, is a member of key financial boards and a consultant for taxpayer facilitation. He emphasizes that sustainable tax growth can only come by shifting from fear-driven enforcement to a transparent, service-oriented system rooted in public trust.
At the heart of the problem lies Pakistan’s tax fear culture. Taxation, for the average citizen, doesn’t symbolize contribution, it symbolizes trouble. A large portion of the population actively avoids registration not to escape their duty, but to escape the anxiety that comes with it. It’s a sad reality that many feel more at ease paying higher rates as non-filers on vehicles, property, or banking transactions, just to avoid entering the formal tax net. Why? Because being a filer often invites a barrage of confusing notices, unwarranted scrutiny, and endless red tape. The mere sight of an email or SMS from the Tax Authority or other tax authorities can cause stress, even when no dues are owed. That reaction alone reflects the system’s failure to create a tax-friendly environment.
This deep-rooted aversion is not born from ignorance, it’s born from experience. There is minimal taxpayer facilitation, no educational campaigns to foster a sense of civic pride, and no incentive-driven programs to reward compliance. Instead, taxpayers feel targeted, not respected. Until that perception changes, voluntary compliance will remain a distant dream.
Meanwhile, the flood of Statutory Regulatory Orders (SROs), conflicting circulars, and rapidly shifting compliance rules have turned the tax system into a maze. Even seasoned consultants struggle to keep up. This unpredictability breeds mistrust, confusion, and non-compliance driving people further into the informal and undocumented economy.
Pakistan needs more than policy tweaks. It needs a national tax transformation. A consistent, coherent policy framework, one that is people-friendly, digitally integrated, and transparently enforced is the only way forward. Timely refunds, simplified filing processes, efficient grievance redressal, and public awareness campaigns must become core pillars of tax strategy.
Above all, we must stop criminalizing compliance. Taxation should feel like participation in nation-building, not punishment for being responsible. Until we replace fear with fairness and transform the narrative from obligation to ownership, Pakistan’s coffers will continue to bleed, and its future will remain uncertain.