ISLAMABAD: The Tax Payers Alliance of Pakistan (TPAP) has urged the government to bar the Federal Board of Revenue (FBR) from issuing unnecessary notices to compliant taxpayers and to introduce legislation through the Finance Bill 2026 to curb this unhealthy practice.
Officials of the TPAP and the Prime Institute held a press conference at the National Press Club on Wednesday. They spoke about the upcoming FY 2026-27 budget, warning that the government’s current tax system is punishing compliant sectors instead of making taxes fair for everyone.
Anwar Kashif Mumtaz, the National Convenor of the TPAP, said that paying taxes is necessary to run the country, but taxpayers should be respected.
“The tax rates in Pakistan are too high and unfair. Salaried workers and self-employed people face huge amounts of direct and indirect taxes. Of 250 million people, only 7 million are registered as taxpayers. The government keeps squeezing the same documented people instead of expanding the tax base. This has increased the cost of doing business and is forcing businesses to move into the cash economy.”
He added that the FBR is facing a tax revenue shortfall of Rs868 billion in the last 11 months. This proves that harassing people with notices did not work. He stated that the constitution guarantees that Pakistan should be a tax-welfare state, yet taxpayers receive no basic benefits like health, education, or good infrastructure. He also noted that lawmakers often blame ‘IMF conditions’ to hide their own high spending.
Maryam Ayub, a Research Economist at the Prime Institute, presented ‘The Burden of Taxation’ based on recent reports by the Prime Institute. She challenged the government’s pride in collecting a ‘record’ Rs11.74 trillion in taxes in FY 2024-25, explaining that this money came directly out of the pockets of struggling families.
“On paper, reports show that average monthly household income doubled from Rs41,545 in 2018-19 to Rs82,179 in 2024-25. But the real cost of living grew much faster. Rents went up by 500 percent to 700 percent, electricity bills rose by 800 percent to 1,500 percent, petrol increased by 260 percent to 340 percent, and wheat flour rose by 300 percent to 450 percent. The monthly cost of living for a middle-class family jumped from Rs20,000–40,000 in 2010 to between Rs120,000 and Rs350,000 in 2026. Incomes only doubled, but the cost of living increased up to ten times.”
During the press conference, it was pointed out that about 55 percent of Pakistan’s tax revenue comes from indirect taxes like GST and fuel levies. These taxes do not separate the rich from the poor. Everyone pays the same sales tax. The poorest 60 percent of families spend 64 percent to 67 percent of their income just on basic needs.
While regular people struggle, powerful industries and individuals get special breaks. Government reports show that tax exemptions and special favors cost the country Rs2,434 billion in FY 2023-24. Furthermore, the agricultural sector makes up 23 percent of GDP but pays less than 1 percent of national taxes. Also, senior officials received Rs120 billion in tax-free perks in FY 2024-25.
Pakistan has 196 million telecom subscribers, but only 29 percent can afford to use the internet. This is because taxes on internet and mobile services add up to a heavy 34.5 percent burden, and imported smartphones face over 50 percent tax. This blocks young freelancers and digital growth.
Copyright Business Recorder, 2026