By M Qadeer
Q: What is your key demand regarding sales tax policy in Pakistan?
A: The government should bring the sales tax down to a single-digit level instead of increasing it to 19 percent. In my view, high tax rates discourage compliance, shrink the tax base, and push economic activity into the informal sector. A lower rate would actually improve documentation and increase overall revenue collection.
Q: How do you evaluate the upcoming Budget 2026–27 in terms of tax reforms?
A: The budget includes some positive elements, particularly relief measures in the property sector and the introduction of a fixed tax regime. These are steps in the right direction. However, the overall policy framework appears to lack proper consultation with stakeholders, which is essential for sustainable and practical reforms. Without consultation, policies often fail to reflect ground realities.
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Q: What is your opinion on the proposed fixed tax regime and turnover-based taxation?
A: The idea of a fixed tax regime is useful for simplifying the system, but its implementation must be carefully designed. The proposed turnover-based tax rate of one percent is too high for many businesses. It should be reduced to 0.25 percent. Lower rates encourage compliance and bring more businesses into the documented economy, which ultimately increases total revenue instead of reducing it.
Q: You have mentioned simplification of tax returns. What changes do you suggest?
A: The Federal Board of Revenue (FBR) should introduce a simplified tax return system, ideally a one-page or summary-based form. The current system is too complex and discourages compliance. Taxpayers should not be forced to navigate complicated forms and procedures. A simplified system will make it easier for individuals and businesses to declare income and assets honestly.
Q: What challenges do taxpayers face in declaring assets?
A: Many taxpayers struggle with how to properly declare their assets under the current system. The process is overly technical and confusing. There is a need for a redesigned framework where asset declaration is simple, transparent, and user-friendly. When compliance becomes easier, more people will willingly participate in the tax system.
Q: Pakistan currently has a large number of taxes. What is your view on this structure?
A: At present, there are more than 60 different types of taxes in the country. This creates complexity, confusion, and high compliance costs for businesses and individuals. Such a fragmented system discourages investment and formal economic activity. Tax rationalization is necessary to ensure clarity and efficiency in the system.
Q: What is your assessment of FBR’s enforcement approach?
A:The Federal Board of Revenue is currently operating in a very aggressive enforcement mode, particularly under Section 175. In some cases, taxpayers are reportedly being pressured to deposit large amounts without proper resolution of disputes. Enforcement is necessary, but it must be balanced with facilitation and fairness. Otherwise, trust between taxpayers and institutions is damaged.
Q: Do you think the government is truly avoiding new taxes?
A:The government has stated that no new taxes will be introduced, but there is concern that existing taxes may be increased or their scope expanded. In practical terms, this can still increase the burden on taxpayers. Policy transparency is important so that businesses and individuals can plan effectively.
Q: How do you view corruption and institutional challenges in the tax system?
A: Corruption does exist in the system, but it is often more visible at lower operational levels. Higher-level officials are generally less involved, but systemic weaknesses allow such practices to continue. Strong institutional accountability, automation, and transparency are required to reduce corruption and improve trust.
Q: Do you see any international examples Pakistan can learn from?
A: Countries like Bangladesh have shown significant economic progress, reaching strong growth levels in recent years. Pakistan can learn from such examples, particularly in terms of tax simplification, export promotion, and institutional efficiency. However, reforms must be adapted carefully to local conditions and implemented consistently.
Q: What is your final recommendation for Pakistan’s economic and tax policy direction?
A: My core recommendation is a shift toward a single-digit sales tax regime. This reform alone can significantly improve compliance, reduce corruption, and expand the tax base. When rates are lower, businesses are more willing to formalize, which increases overall revenue. Combined with simplified returns and stakeholder consultation, this approach can transform Pakistan’s economic structure and strengthen long-term growth.
