Pakistan’s total fiscal revenue has reportedly surged by nearly 100% over the last two years, escalating from Rs. 9.6 trillion to almost Rs. 18 trillion, according to fresh data released by the International Monetary Fund (IMF). While the Finance Ministry attributes this significant jump to improved tax collection, new levies, and central bank support, a growing chorus of critics warns that this rise masks deeper structural problems within the nation’s tax regime.
An Islamabad-based investment banker told ProPakistani, “The increase is largely cosmetic, achieved through repeated hikes in existing tax rates pushed largely through new budgets every June. The tax base has remained idle throughout this period.” This sentiment is echoed by commentators on social media platform X, who argue that the revenue growth is not a genuine turnaround but rather a burden shift. “Electricity bills have doubled, and that means more taxes. Salary taxes have doubled. But these are already documented sectors. The base hasn’t expanded at all,” an expert noted in a recent message.
IMF’s Acknowledgment Raises Eyebrows
The IMF’s endorsement of Pakistan’s fiscal growth has, somewhat paradoxically, raised questions among financial observers. “It amazes me why the IMF doesn’t push for real reforms,” the aforementioned banker expressed. He further questioned the lack of comprehensive implementation of the track-and-trace system and the failure to mandate CEOs and CFOs to certify company accounts through the FBR, alleging that “FBR tried, but it was forced to retreat. Off-book transactions continue unchecked.”
Upcoming Budget: More Taxes on Existing Base?
Looking ahead to the upcoming FY26 budget, there are proposals for new tax measures to generate an estimated Rs. 600 billion. Topline Securities suggests the government might consider extending the exemption limit on salary or reducing the tax rate by 2.5 percent for all salary brackets, as well as promulgating inflation-adjusting minimum wages and some cuts in super tax. However, these measures are reportedly contingent on IMF approval.
Conversely, the government is reportedly eyeing Rs. 150 billion in new taxes on biscuits, chips, and other packaged foods. A proposed Rs. 5 per liter hike in petroleum levy on petrol and diesel could yield an additional Rs. 80 billion, and a stricter regime targeting retailers aims to squeeze out Rs. 295 billion. Critics argue that these efforts continue to focus on increasing taxes on already-documented sectors rather than genuine structural reform.
Concerns are mounting that such “superficial gains” risk undermining the credibility of future FBR reforms. Arguments on X suggest that the FBR’s performance is being manipulated by taxing the same, already-documented sectors more heavily, rather than successfully bringing untaxed sectors into the formal tax net.
Despite the robust headline revenue figures, the upcoming FY26 budget may target slower overall tax growth, which could potentially ease some economic pressure. Nevertheless, without genuine structural changes and sustained IMF support, the next fiscal year is anticipated to be challenging, particularly for the salaried class, who fear an even greater burden.
