Pakistan’s economy is buckling under the weight of exorbitant taxes and a glaring absence of social welfare support. Regardless of whether civilian or military regimes have held power, every government has imposed regressive tax measures that disproportionately burden the common citizen. This has led to skyrocketing inflation, hitting the majority of the population hardest, while the state remains indifferent to the needs of its economically vulnerable sections.
A recent analysis in Lahore-based The Friday Times highlights that Pakistan’s fiscal crisis transcends mere budget deficits; it signals a profound breakdown in the social contract between the state and its people. Citizens are squeezed with high taxes but receive little in return by way of public services or welfare. This imbalance has not only failed to generate sustainable revenue but has eroded public trust, discouraged investments, and shrunk the formal economy.
The piece argues that Pakistan’s developmental failures are often misattributed to low productivity, weak exports, or lack of innovation. The real culprit lies in the government’s cost structure, which has made doing business prohibitively expensive and structurally unviable. Citing a private sector study from Nikkei Asia, it reveals that operating a business in Pakistan costs 34% more than in other South Asian economies.
According to the Pakistan Business Forum (PBF), these extra costs stem from structural, cumulative, and policy-driven factors, not temporary glitches. The tax base is alarmingly narrow, with only 3.4 million effective taxpayers—barely 4% of the 85.6 million workforce—footing the bill for the entire state. This has effectively declared war on the middle class, forcing a tiny group to cover massive fiscal deficits while the informal elite escapes unscathed.
The tragedy isn’t low tax collection but the disorganized, inefficient manner of taxation. High rates on a narrow base yield poor returns, compounded by nearly 5 trillion rupees in tax expenditures. Despite mini-budgets, super taxes, petroleum levies, stringent withholding provisions, and presumptive taxation expansions, the debt-to-revenue ratio exceeds 700%. Without reforming this broken system and bolstering welfare, Pakistan’s economic woes will only deepen, stifling growth and public faith in governance.