Federal Board of Revenue (FBR) Chairman Rashid Langrial said that Pakistan’s economic stability is not possible without expanding the tax base, warning that continued tax evasion by large segments of society is placing an unfair burden on a limited group of taxpayers, particularly salaried individuals.
Speaking during a panel discussion at Alhamra, Langrial said that while some citizens regularly pay taxes, a large number deliberately avoid entering the tax net. He noted that out of 42 million households in the country, around seven percent have air conditioners, arguing that such households should clearly fall within the tax net.
The FBR chairman said that 4.9 million people filed tax returns in the previous fiscal year, while the number rose to 5.9 million this year. However, he termed it a “serious issue” that about 320,000 filers declared zero tax liability in their returns.
Langrial pointed out that Pakistan’s tax-to-GDP ratio remains lower than that of other countries in the region due to a narrow tax base and weak compliance. He warned that failure to broaden the tax net would continue to shift the burden onto a few sectors, with the salaried class bearing the brunt because their incomes are fully documented and difficult to conceal. He added that salaried individuals in Pakistan face comparatively higher tax rates than their counterparts in the region.
He stressed that reducing tax rates would only be possible once the tax base expands.
Highlighting sectoral disparities, he said that out of 176,000 registered doctors, only 55,000 filed tax returns, and among them, 39,000 declared annual incomes below Rs2 million.
The FBR chairman further said that out of every Rs100 collected in taxes, only Rs38 goes to the federal government, limiting its fiscal capacity. He opposed having multiple tax rates for exporters and warned that companies submitting incorrect tax returns would face audits.
Langrial said the FBR is undertaking institutional reforms to boost revenue collection, adding that improved monitoring and checks on sugar mills had resulted in billions of rupees in additional revenue. Addressing allegations of corruption within the department, he said several officers had been arrested, reflecting the seriousness of the accountability process. He reiterated that reforms would continue to ensure a fair tax system and prevent the entire burden from falling on salaried taxpayers.
Former finance minister Miftah Ismail, speaking at the same event, said he had planned to abolish Rs6 to 7 billion worth of taxes after returning from an official visit to the United States with the prime minister, but was removed from office before he could do so. He admitted to making mistakes during his tenure and said that if given the opportunity, he would have corrected them. He added that it was now the responsibility of the current authorities to carry out meaningful reforms.
Miftah Ismail emphasized that revenue collection is critical for the country’s functioning, as national expenditures depend heavily on tax receipts.
Addressing the gathering, leading taxpayer Musaddiq Zulqarnain said there was no doubt that tax collection faces serious challenges. He remarked that bureaucrats, politicians and salaried individuals all pay taxes but also criticize one another, stressing that everyone must fulfill their tax obligations.
He likened tax evasion to the theft of zakat, saying taxes benefit the country as a whole and should not be viewed through the lens of whether a filer is wealthy or an ordinary citizen. He added that FBR officials possess sufficient data and questioned whether chief commissioners themselves consistently file returns or issue notices, arguing that stricter internal accountability could significantly improve tax collection.
