New Delhi, Feb 22 (NationPress) Over the years, both civil and military administrations in Pakistan have continuously increased burdensome and regressive taxes, leading to an unbearable cost of living for the vast majority of citizens. To add to this plight, the government exhibits a total disregard for the welfare of the economically disadvantaged, according to a report in Pakistani media.

This fiscal crisis transcends mere numbers and deficits; it reflects a shattered social contract, highlighting the widening gap between the taxes paid by citizens and the benefits received in return. The imposition of high taxes without corresponding welfare services has not only failed to bolster revenue but has also undermined public trust, stifled investments, and weakened the formal economy, as noted in the Lahore-based publication, The Friday Times.

The persistent failure of Pakistan's economy is often attributed to familiar issues such as low productivity, inadequate exports, and insufficient innovation. However, these are merely surface-level symptoms; the underlying problem is a state-imposed cost structure that renders business operations excessively expensive and fundamentally irrational.

A recent analysis from Nikkei Asia reveals that businesses in Pakistan face operating costs that are 34 percent higher than those in comparable South Asian nations. This study, conducted by the Pakistan Business Forum (PBF), indicates that these additional costs are not incidental but rather structural, cumulative, and the result of policy decisions.

With only 3.4 million effective taxpayers, constituting a mere 4 percent of the 85.6 million-strong workforce, the middle class has been compelled to bear the brunt of a multi-trillion rupee deficit, while the informal elite remain untouched. The article emphasizes, “We have classified excellence as a taxable offense and transparency as a path to insolvency.”

The real tragedy is not that Pakistan collects insufficient taxes (which is a misconception regarding the tax-to-GDP ratio) but rather that it does so in an irrational manner—placing high taxes on a narrow base with low yields and a tax expenditure nearing Rs 5 trillion. Despite numerous mini-budgets, super taxes, increased levies on petroleum, enhanced withholding regimes, and expanded presumptive taxation, the debt-to-tax ratio remains alarmingly high, exceeding 700 percent.

A minuscule segment of the populace—salaried individuals, documented businesses, corporate entities, and compliant exporters—supports a bloated public apparatus. The informal sector flourishes, while the retail and wholesale markets remain predominantly unrecorded. Agriculture is scarcely taxed, and real estate speculation benefits from favorable regimes. Instead of broadening the tax base, fiscal authorities consistently resort to raising rates on those already contributing.