Pakistan is facing an identity crisis, burdening its population with taxes while offering outdated public services, as per a recent report. The country’s fiscal strategy focuses on taxing a small productive group to support an inefficient bureaucracy, states the Business Recorder report. With only 3.4 million effective taxpayers out of an 85.6 million workforce, Pakistan is criticized for penalizing excellence and lacking transparency.
The report highlights the disparity where salaried professionals, taxed at 35%, still have to pay for private security, power, and education out-of-pocket. This situation leads to a luxury premium for services the government fails to provide adequately. The report predicts a significant brain drain, with 800,000 skilled individuals expected to leave Pakistan by 2025 due to unfavorable policies or forced exile.
Despite arguments from the IMF and state officials citing the fiscal deficit as a constraint, the report challenges the logic of burdening the documented sector excessively. It criticizes the high tax rates on a small tax base, attributing them to the country’s economic stagnation and the perpetuation of the shadow economy. The report emphasizes that true fiscal stability relies on trust and broad participation, not just on extracting funds aggressively.
