The economy of Pakistan has not had a comfortable ride for decades, yet the only consistent economic factor which is persistent in all regimes is the inability of the Federal Board of Revenue (FBR), apex tax collection and the administering body at the federal level, to broaden the tax base. The FBR’s own figures depict disturbing outcomes of many campaigns aimed at broadening the tax base. In the year 2016,only1.2 million persons filed tax returns. The population of Pakistan, as per the latest census, is around 200 million and cellular telephone subscribers number at around 100 million. Taxpayers, however, come in at only 1.2 million. The tax to GDP ratio is stagnating below10 percent which is dismally low according to international benchmarks. Structural tax reforms are needed to enhance the tax to GDP ratio to a decent level to improve the socio-economic conditions of the populace, spur economic growth and create job opportunities. The disturbing aspect of retarded development is that extremism and lack of tolerance in the society is becoming increasingly widespread, which can isolate Pakistan internationally. The incremental increase in tax filers mostly comprises of pensioners who want to avail the distinction in different tax rates for filers and non filers or those filers whose source of income is from non-commercial transactions including rental and salary income. The tax system in Pakistan is iniquitous and places a disproportionate reliance on taxes collected at source or advance tax payments of around a handful of companies listed on the country’s stock exchange. The tax authorities have taken a laid back approach and in the opinion of most of the leading economists, tax collection is perceived to be on ‘auto pilot’. An observation of direct tax collection reveals that withholding based comes in at 78 percent and advance tax, mainly from the corporate sector amounts to 19 percent. The powers that be seem unconcerned about the affect a high GST on petroleum products has on the competitiveness of Pakistani exports There is excessive reliance on taxes on petroleum products (POL) which is evident when we consider that the import of petroleum products during the 2017financial year amounted to$10.606 million including petroleum of $6.379, crude of $2.764 and liquefied natural gas (LNG) of $1.270. The surging import bill has doubled the external current account deficit as compared to the corresponding period of the previous financial year and the accompanying inflationary trends has upset investment projections but enhanced tax revenues conveniently. For the 2015-16 fiscal year, net collection of domestic general sales tax (GST) from POL was 42 percent of the total GST collection at the domestic stage. Additionally the share of collection of GST from POL is 32 percent at the import stage. The collection from direct taxes is around 36 percent of the FBR’s net collection. The collection of GST at both the imports and domestic stage and Customs duty from POL works out to almost 17 percent of the total collection and remains a steady revenue stream requiring little effort in its collection. From a revenue aspect POL is a sacred animal. Whether this extremely high incidence of taxation on POL products enhances the cost of production and electricity tariffs thereby rendering the exports of Pakistan uncompetitive is apparently not a concern for those who devised this country’s financial policy. Even the much touted tax revenues from the telecom sector are derived from individual telephone subscribers and not taxes on the profits of the telecom companies. The mainstay of tax collection remains indirect taxes, including GST. The internationally accepted principle of taxing those who are earning higher incomes and have larger revenue streams has been ignored in Pakistan and the burden of taxation is distributed amongst the class of persons which has the lowest earning capacity. The efforts of the government to broaden the tax base go up in smoke, which can be attributed to administrative apathy. Meanwhile, the existing lot of unfortunate taxpayers are bled dry. It appears that the government is piling up a domestic debt as due to discouraging refunds and obtaining excessive advance payments from the major public listed companies. Such unethical practices curb their cash flow. The revenue streams of the corporate sector are affected, thereby expenditure on acquiring finance from banks increases which raises production costs and exports are also rendered uncompetitive. Resultantly, the lesser revenue streams available to the corporate sector, especially those listed on the stock exchange, imply that these companies would not be able to re-invest funds into research and development and would be at a disadvantage as compared to the corporate sector in countries in the region. The industrial and service sector of Pakistan is thus being marginalised and being rendered uncompetitive internationally, impinging on the economic security of Pakistan and creating space for extremism to creep in. The writer has done his Bachelor of Science in Business and Management from the London School of Economics and Political Science and is presently doing Masters in Sustainable Development from SOAS. He is currently involved in research in the areas of finance, energy and environment related to sustainable development Published in Daily Times, January 8th 2018.