One of the central problems of Pakistan’s state and economy is the low level of tax collection. While nobody in the world likes to pay taxes in Western countries most people understand that taxes are needed to run the state and its institutions and therefore, efficient tax departments are present. States throughout history have used money provided by taxation to carry out the functions for which they have been created. Some of these include expenditures on economic infrastructure (roads, public transportation, sanitation, legal systems, public safety, education, health-care systems, military, scientific research, culture and the arts, public works, distribution, data collection and dissemination, public insurance, and the operation of government and parliament itself. The Pakistani state since its inception has not been able to install a taxation system that earns enough revenue to run the state and provide for the socio-economic and cultural needs of its fast growing population as well as for national security in a growingly dangerous region. Because of that it has filled the financial void with loans and more loans which has resulted in the current situation where more than half of the GDP has to be spend on servicing the loans. Successive World Bank and Asia Development Bank programs have demanded from the respective sitting governments as a main step to put Pakistani economy on a sound footing to broaden the tax basis of the country. So far these appeals have not been successful. The current government has vowed to turn the economy around and put it on a healthy footing. Obviously this means to collect more taxes but during the one year in office tax collection could not be raised to the level necessary to meet the needs of our economy. Most of the tax collection in Pakistan has traditionally been through indirect taxes which represent 60 percent of the total tax collected. One of the motivations is that no political government wants to be seen raising individual taxes, hence indirect taxes that are anonymous and concern everybody dominate the structure. However, indirect taxation provides another important advantage to the state: it offers very minimal opportunity for tax evasion. While it is a necessity in the modern world and indispensable for business, used in excess it becomes addictive and detracts the people from gainful employment and can even damage their brain by radiation from the cell phones Currently the mix of tax collection from different sectors in Pakistan is such that manufacturing contributes 52 percent of all taxes while it only represents 20 percent of the GDP. Services sector contributes 37 percent of taxes while it represents 61 percent of GDP. Agriculture is our boon. It accounts for around 19 percent of GDP but pays less than 1 percent of all taxes, a fact that has to be changed but is not easy to be dealt with when all the feudal landowners are sitting in parliament. For immediate relief of our financial problems that means that the services sector could be used to raise the tax collection. Utilized in a proper way higher taxes in the services sector could at the same time bring more money to the national kitty and give incentives to the consumers to limit the use of services to the really necessary minimum. That applies to utilities like gas and electricity consumption but also to telecommunication. The tax collection could be increased significantly by taxing citizens based on their consumption thresholds. Continue to increase the rates above a certain threshold and exempt the bottom of the pyramid segment to provide them relief and create more social inclusion. One such example could be telecommunication. Telecommunication is a necessity and a luxury at the same time. It is important to stay in contact to develop business and for social reasons as well, but in some segments of population such as young people and low income employees talking on the phone for hours and hours has become an addiction comparable to the consumption of drugs. A comparison that comes to mind is opium. Opium dependence emerged in India and China when the British East India Company decided to deal in opium in a big way because of its easy production and high profit margin. Opium became the most important source of revenue for the British East India Company. They produced opium in India and sold it to China by means of British and Chinese smugglers. Opium steadily accounted for about 17-20% of Indian revenues and it was essentially the commodity which financed the British Raj in India so much so that recent research proposed that it was no coincidence that 20 years after the opium trade stopped, the Raj more or less packed up its bags and left. India was not a paying proposition any longer. While opium was hell of a business for the British, for China – the main consumer of opium – the matter looked differently. China’s economy was the largest in the world for many centuries until the opium wars in the 19th c. Furthermore, China was a net exporter, and had large trade surpluses with most Western countries. Within a decade after the end of, and as a result of the second opium war, China’s share of global GDP had fallen by half, and its sovereignty over its territory was seriously compromised until the end of World War II, and the retrocession of Hong Kong and Macao at the end of the 20th century. This can be compared to telecommunication in Pakistan today. While it is a necessity in the modern world and indispensable for business, used in excess it becomes addictive and detracts the people from gainful employment and can even damage their brain by radiation from the cell phones. It undermines work ethics and causes unnecessary expenses. In order to use telecommunication to raise the tax income of the Pakistani state and at the same time discourage its addictive use the taxation of telecommunication should be structured differently from what it is now. While tax exemption or a low tax level could be maintained for a threshold of say 300 min per user per month above that a progressive tax structure with a 100% tax level for an upper threshold of say 900 min per month and user should be introduced. Those who have for important reasons to make many or long phone calls will have to pay, but those who just like to chat might want to limit this past time of theirs. In any case from the point of view of tax collection everybody can talk as much as he or she wants -higher tax collection will benefit society in a different way, namely by providing more money for investment in economic and social infrastructure. The writer is a defence and security analyst