ON any weekday morning in Pakistan’s major cities, the same scene plays out thousands of times. A student books a bike ride to avoid missing class. A working woman chooses app-based mobility because it feels safer and more dependable than waiting by the roadside. A driver logs in early, hoping to make enough trips before fuel prices shift again. These are not luxury transactions. They are now part of how our cities function. Yet despite its growing importance, the policy framework around the sector still treats it as an optional convenience rather than essential economic infrastructure.
Rethinking one-size-fits-all taxation: This gap is most visible in how the sector is taxed. Pakistan’s current approach applies the same tax treatment regardless of how a platform shares value within its ecosystem. A company charging a heavy 25 to 30 per cent commission is treated exactly the same as one operating on a leaner structure that leaves significantly more in drivers’ hands. That misses a critical opportunity. Taxation should not only generate revenue; it should also encourage market behaviours that strengthen the economy. In ride-hailing, that means rewarding models that protect driver earnings, keep fares competitive and expand access for riders.
The case for commission-based taxation: A more progressive framework linked to platform commission rates would do exactly that. Platforms operating below a 10pc take rate, where drivers retain the strongest share of earnings should face the lowest tax burden. Higher-commission models should move into progressively higher tax tiers.
The economic logic is straightforward. When drivers keep more of what they earn, supply remains stable and service quality improves. Riders benefit from more competitive fares and more reliable availability. Greater usage creates more trips, stronger labour mobility, and wider economic participation across cities. This is especially relevant in Pakistan, where fuel prices, traffic congestion, varying trip distances and income sensitivity make fixed pricing less practical. This argument is supported by a study conducted by Oxford Economics on in-app fare negotiation in emerging markets, which found that flexible pricing can improve affordability for riders while helping drivers secure fares that better reflect their operating costs. In Pakistan, 59pc of riders and 54pc of drivers surveyed said negotiated fares enabled trips that might not have taken place otherwise. This demonstrates how fair pricing can increase demand, support driver earnings and improve access to mobility.
The road ahead for urban mobility in Pakistan: Pakistan’s digital economy is entering a more mature phase and urban mobility sits at its centre. The sector now needs policy tools that reflect its real economic role: enabling movement, supporting livelihoods and keeping cities productive.
When taxation rewards fair pricing and sustainable platform models, the benefits extend far beyond ride-hailing. They strengthen labour mobility, support urban economies and make digital infrastructure more meaningful in everyday life. The next phase of Pakistan’s urban growth will depend on how effectively people can move through its cities. The time to build that future with clarity and fairness is now.
—The writer occasionally contributes.
