EDITORIAL: One of the more damaging flaws of governance in Pakistan today is the disconnect between what policymakers say they wish to achieve and the measures they ultimately adopt, with the latter often proving detrimental to the objectives they publicly champion. In recent years, the government has unveiled ambitious plans to digitise the economy, expand renewable energy and strengthen climate resilience. Yet, time and again, official actions have worked to undermine these objectives, and have created a policymaking environment marred by contradictions, where one arm of the state establishes a certain goal while another impedes its attainment.
The government’s approach to digitisation offers a telling example. While official discourse continues to cast digital transformation as a central pillar of economic policy, authorities simultaneously impose steep taxes on the very tools that enable digital participation. A recent report commissioned by a telecom group has now warned that heavy taxation of mobile services has created a “tax trap” that is raising connectivity costs, suppressing mobile adoption and slowing the country’s broader digital transformation agenda. One cannot help but wonder how initiatives such as the Uraan Pakistan programme, which seeks to transform Pakistan into a trillion-dollar economy through comprehensive digitalisation, realistically take root under such conditions? Similarly, the Digital Nation Pakistan Act, which aims to build a digital society and economy through digital identities and integrated public-service delivery rests on the same fragile foundation. So too do Pakistan’s aspirations to participate in the AI revolution and to fully benefit from the much-touted 5G rollout. All these ambitions rest on a simple prerequisite: affordable access to digital technology.
Mobile phones and the services accessed through them constitute the primary gateway to digital payments, e-commerce, online education and various financial services, and for lower-income households, often the only means of participating in the digital economy. Yet these essential tools remain some of the most heavily taxed in the world, according to the report. Mobile services face a combined tax burden of 37 percent, comprising a 19.5 percent sales tax, a 15 percent advance income tax collected from consumers and a 2.5 percent regulatory duty. Telecom operators, meanwhile, are subject to a 29 percent corporate income tax and a 10 percent super tax on profits. These costs are ultimately passed on to consumers, discouraging adoption and usage while impeding digital inclusion.
The same pattern is evident in the energy sector. Even as policymakers can’t stop waxing lyrical about the need to expand renewable energy and strengthen climate resilience, measures continue to be introduced that discourage a shift away from fossil-fuel-dependent electricity generation. The power division has proposed a “two-part industrial tariff policy” that would substantially increase fixed charges on industrial consumers using less than their sanctioned loads due to investment in solar or other off-grid sources. This is clearly an attempt to generate revenue to finance idle capacity payments and offset losses from consumers migrating away from the national grid, rewarding higher grid consumption through lower unit costs while penalising reduced reliance on it through heavier fixed charges. For a country whose socioeconomic future depends on building climate resilience, discouraging investment in solar energy and other renewable sources risks sidelining climate commitments altogether.
The problem here lies not only in policy design but also in siloed policymaking. Different arms of the government pursue their own immediate objectives with little regard for broader national goals, resulting in a lack of joined-up thinking. Instead of policy objectives being reflected in the incentives the government creates and the choices it makes, policymaking has been reduced to slogans and box-ticking exercises designed to satisfy development frameworks and donor expectations. Coherence in policy and execution must be urgently enforced, otherwise national priorities will remain perpetually out of reach.
Copyright Business Recorder, 2026
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