‘Tax evasion’ in Pakistani economy Termites! Loss of Rs 1 trillion gives sleepless nights, reveals report

Tax Evasion in Pakistan: Due to large-scale tax evasion in Pakistan, the government is facing a loss of revenue of about Rs 1 trillion every year. According to the news published in Pakistani media, the national exchequer is losing about Rs 500 billion annually due to tax evasion in the real estate sector alone, while the illegal tobacco business is causing a loss of Rs 310 billion. Additionally, many consumer goods industries are operating outside the document economy.

The article published in Karachi-based Business Recorder states that such widespread tax evasion and smuggling is not possible without the connivance and protection of regulatory agencies. According to the article, if this protection is not in place, the shadow economy could collapse rapidly with even modest enforcement pressure.

Government is putting burden on taxpayers

The article said that the revenue deficit of Rs 545 billion of the Federal Board of Revenue (FBR) in the first half of the current financial year reflects this serious situation. This is not simply the result of weak economic activity or a limited tax base, but of an economy where a large portion of value creation is deliberately kept outside the tax net. Despite this, instead of breaking the structures that promote tax evasion, the government is putting additional burden on the same honest taxpayers.

Honesty is punished and theft is rewarded.

According to the article, this method has now become common and is extremely harmful. The salaried class, registered businesses and formal companies have been bearing a disproportionately heavy tax burden for a long time. Higher effective tax rates on this category discourage investment, distort incentives and push marginal businesses back into the informal economy. This creates a cycle in which honesty is punished and tax avoidance is rewarded.

More irregularities in real estate sector

Citing a study conducted by research agency Ipsos in the article, it was said that this chaos has become deeply rooted in many sectors. Persistent undervaluation, weak enforcement and selective investigations continue to plague the real estate sector. The illicit tobacco trade is thriving despite strong distribution networks and clear enforcement points. Similar situation is also being seen in tyres, lubricants, pharmaceuticals and tea industries.

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Political will is the biggest lack

in the article tax evasion The need for targeted enforcement, proper documentation, reliable assessment mechanisms and full implementation of track-and-trace systems has been repeatedly discussed to curb this. But the biggest lack in this is said to be political will.