PRIME Minister Shehbaz Sharif’s call for intensifying measures against tax evaders underscores a crucial turning point in the country’s economic trajectory. The focus on expanding tax revenue collection could be the key to unlocking a sustainable financial future.
Indeed, there is no alternative but to expand the tax base. The country’s ongoing reliance on foreign loans to bridge fiscal deficits has been a long-standing challenge, one that perpetuates a cycle of debt. This reliance places undue strain on finances and hinders development potential. The only way out is to ensure that tax evasion is addressed and that every individual and sector that benefits from the country’s economic system contributes its due share. This move will not only help close the revenue gap but will also reduce dependence on foreign loans and the conditionalities often tied to them.
It is a matter of satisfaction that under the leadership of PM Shehbaz Sharif, the country has started making notable strides toward economic stabilization- something also recognized by international institutions. The stock market has shown resilience, with Bloomberg forecasting a 27% growth for it by the end of next year, further bolstering the sense of optimism surrounding the economic outlook. However, while these positive indicators are certainly encouraging, sustainable economic progress cannot be built on short-term gains alone. For long-term stability, it is imperative that tax-to-GDP ratio improves significantly. Currently, the country’s tax base is too narrow, with many potential contributors—particularly in the retail and agricultural sectors—largely outside the formal tax net. With an enhanced focus on bringing more sectors into the tax net, the government can work toward a more progressive tax system where the burden is distributed fairly. This would help alleviate the strain on those who already comply with tax obligations and ensure that the honest taxpayers are not disproportionately affected by the structural weaknesses in revenue system.
