FEDERAL Board of Revenue’s (FBR) ambitious plan to raise tax-to-GDP ratio from the current 10.24% to 18% is a welcome step—indeed, an absolute necessity—if the country is to walk the path of economic self-reliance.
Without a meaningful increase in revenue generation, we will remain stuck in a cycle of borrowing and budget deficits, with limited capacity to invest in critical sectors like education, healthcare and infrastructure. Raising the tax-to-GDP ratio is not just a fiscal goal—it is a national imperative that affects the everyday lives of millions of citizens.
According to the FBR’s vision, its own contribution is projected to increase to 14%, with provincial revenues adding 3% and the petroleum levy contributing another 1%. Much of this improvement is expected to come from plugging tax leakages, enhancing digitization and reforming outdated processes. However, a critical concern has been rightly raised by the Supreme Court during the ongoing hearing on the controversial super tax. Justice Muhammad Ali Mazhar’s remarks underline an uncomfortable but undeniable reality: whether it is a bag of cement or a liter of LNG, the burden of taxation eventually falls on the common man. In economic structure, any tax imposed on businesses is almost inevitably passed on to consumers through price hikes. The burden must not continue to fall disproportionately on salaried individuals and common man—many of whom were promised tax reliefs, only to see nominal reductions in the recent federal budget. Meanwhile, high-potential sectors of the economy continue to operate largely outside the formal tax net, shielded by loopholes, lax enforcement or political clout. A sustainable and fair taxation strategy must ensure that the real untaxed and under-taxed sectors are brought into the fold. These sectors must not only be registered but monitored, so that they cannot shift their tax burdens onto consumers. The road to reform must be paved with transparency, efficiency and empathy. Citizens will only comply with tax laws if they believe that the system is fair, the revenue is being used responsibly and everyone regardless of class or influence is paying their due share. The FBR’s plan is a step in the right direction but it must be balanced with social justice, accountability and strong protections for the common man.
