Tax system termed barrier to economic growth
He said that taxation complexities and inefficiencies create a challenging environment for businesses, diminishing their potential to thrive and expand.
Mian Zahid Hussain said that the flawed system hinders the vibrant spirit of economic progress, leaving many opportunities untapped in a country rich with potential. He said that the system is rooted in injustice and inequality and continues to fuel fiscal deficits, rising debt, and balance-of-payment crises. He said the government is under pressure from the IMF to reduce the budget deficit and achieve a primary surplus under the $7 billion loan programme.
However, he warned that the burden may again fall disproportionately on salaried individuals and the corporate sector; a fact that cannot be ignored and should be a cause for concern for all of us. The tax target for the current fiscal year was initially set at PKR 12.9 trillion; later, it was revised downward to PKR 12.3 trillion, with a projected shortfall of up to PKR 1 trillion. He said additional taxation seems inevitable to bridge this gap. The upcoming fiscal year's tax target is expected to be PKR 14.3 trillion.
The IMF is pressing for more revenue in the new budget. Still, he said it remains unclear whether the government will continue taxing compliant sectors or finally act against powerful groups that have long remained outside the tax net, referring to industries such as retail, real estate, and agriculture.
Mian Zahid Hussain emphasised that if the government truly intends to relieve the public and the salaried class, it must eliminate unnecessary tax exemptions and take action against tax evaders. He also stressed the need to address losses from state-owned enterprises, power, and gas sectors, which are straining public finances.
He acknowledged that certain industrial and trade groups strongly resist current tax reform plans. However, he urged the government to engage these stakeholders through meaningful dialogue and integrate them into the tax system.
He further advocated completely digitalising all business transactions to curb tax evasion and improve compliance. This move requires the active participation of all stakeholders.
The business leader said it is time to stop repeatedly targeting the salaried class. Instead, the government must go after those who earn billions but contribute nothing to national development. Mian Zahid observed that a fair and uniform tax policy is essential for justice and economic stability. He said that only a non-discriminatory taxation system where every citizen contributes according to their income can ensure sustainable development in Pakistan.
Copyright Business Recorder, 2025
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