Bad Governance in Tax System Hurting Revenue
Summary
Pakistan’s repeated tax amnesty schemes have failed to expand the tax base, instead encouraging tax evasion. Poor governance, lack of business registration, and favoritism in tax policies have further weakened revenue collection. Globally, Pakistan’s financial mismanagement has raised concerns, risking its placement on the FATF grey list. Without reforms, the shrinking tax base and economic instability will worsen.

Key Points

• Failed amnesty schemes – Encouraged tax evasion rather than broadening the tax base.
• Declining taxpayers – Numbers fell from 2.4 million (2007) to 1.2 million (2017).
• Business registration failure – Unregistered businesses remain outside the tax net.
• SRO culture issue – Benefits big businesses, harming smaller enterprises and exports.
• FATF concerns – Weak financial management risks grey-listing Pakistan.
• Public distrust – Salaried class and small businesses feel burdened and unfairly taxed.
• Economic risks – Shrinking tax base may further damage the economy.

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