Being a highly indebted state with a weak economy, Pakistan cannot continue to rely on IMF loans to fulfill its needs. The author notes that it is imperative for Pakistan to reform its taxation system to improve the state’s economic condition. Although tax collection has increased by 18% in 2020, most of the revenue generated from taxes comes from indirect taxes. Apart from that, the people in Pakistan avoid paying taxes by exploiting the complex taxpaying process. The author suggests that to reform the tax administration and increase Pakistan’s tax-to-GDP ratio, direct taxes should be increased and taxes should be imposed on sectors that have been kept out of the taxpaying brackets.
Tashfeen Khan is currently pursuing his A levels and has a keen interest in politics and economics.