Tax Reforms Lag as Poverty and Unemployment Rise, Warns Business Leader

Karachi: The pace of tax reforms in Pakistan remains sluggish and unsatisfactory, according to Mian Zahid Hussain, a prominent figure in the business community. Hussain, who holds multiple leadership roles, emphasized that the country’s economic policies are exacerbating unemployment and poverty. He warned that without significant changes, the situation could worsen.

Hussain noted that resistance to embracing the digital economy is contributing to an increased tax burden on the poor, further complicating their lives. He highlighted that the stringent fiscal and monetary policies are adversely affecting industrial activities, job opportunities, and consumer purchasing power.

Addressing the business community, Hussain pointed out alarming statistics from the World Bank, indicating that Pakistan’s poverty rate has reached 40.5%, with unemployment around 22%. These figures underscore the challenges facing current economic reforms.

Hussain expressed concern that a significant portion of the Federal Board of Revenue’s income is derived from withholding taxes, which are indirect and disproportionately affect salaried and middle-income groups. These groups are already grappling with inflation, high electricity costs, and rising interest rates.

He also raised issues about the increased authority granted to FBR officers under the Finance Bill 2025. Hussain cautioned that while the government aims for a tax target of Rs 14,300 billion, it must not compromise the country’s Rs 123,000 billion economy. He advocated for expanding the economic base as a means to naturally increase tax revenues.

Calling for genuine tax reform, Hussain argued for broadening the tax base rather than burdening existing taxpayers. He stressed the importance of integrating the informal economy into the tax system to sustainably achieve a 13% tax-to-GDP ratio.

For sustainable progress, Hussain emphasized the need for transparency, fairness, and accountability in the tax system. He noted that unpredictable tax policies are deterring both domestic and foreign investment. Hussain urged the government to take immediate action to expand the economic base, reduce production costs, and ensure a fair distribution of the tax burden to avert worsening the current crisis.