The World Bank has strongly criticized Pakistan’s tax system, calling it “highly unfair and flawed,” and urged authorities to effectively bring real estate into the tax net. It stressed that broadening the tax base is crucial to reduce the growing burden on the salaried class.
During a conference titled “Pakistan’s Fiscal Path: Fostering Transparency and Trust” hosted by PIDE in Islamabad, World Bank Lead Country Economist Tobias Haque said all forms of income must be taxed, including from the property sector. He added that digitizing the tax system would help expand the base and ease pressure on middle- and lower-income groups.
Highlighting inefficiencies, PIDE Vice Chancellor Dr. Nadeem Javed revealed that 40% of Pakistan’s development budget is lost to commissions. He alleged that bills are not cleared without paying a 5-7% cut, bypassing the Auditor General of Pakistan. “It’s a known fact,” he added.
The conference also highlighted that despite a population of 240 million, only 5 million people file tax returns, with most revenue coming from General Sales Tax (GST). Economist Dr. Ali Salman pointed out the existence of 88 withholding taxes, with 45 of them generating less than Rs1 billion annually, calling for simplification and reform.