Pakistan Business Forum Urges Broader Tax Base as FBR Misses Targets

By Muhammad Shahzad
LAHORE — The All Pakistan Business Forum (APBF) has urged the government to expand its tax base and take urgent structural reforms after the Federal Board of Revenue (FBR) missed its first-quarter collection target by nearly Rs200 billion, warning that continued policy complacency could deepen Pakistan’s fiscal vulnerabilities.

According to official data, the FBR collected Rs2.885 trillion between July and September of the 2025–26 fiscal year, falling short of its target of Rs3.083 trillion and trailing the International Monetary Fund’s (IMF) benchmark of Rs3.023 trillion by Rs138 billion. The figures highlight Pakistan’s persistent struggle to boost revenues despite multiple reform initiatives under successive IMF programs.

APBF President Syed Maaz Mahmood said the shortfall underscores systemic weaknesses. “Pakistan’s problem is not the absence of taxes—it is the absence of a fair, enforceable, and efficient system,” he said. “Without widening the tax net and ensuring equitable compliance, revenue shortfalls will continue to recur.”

A breakdown of the data showed that income tax receipts reached Rs1.363 trillion, Rs96 billion below target, while sales tax collections stood at Rs1.02 trillion, missing by Rs122 billion. Federal excise duty marginally exceeded its goal at Rs190 billion, and customs duty performed better than expected, collecting Rs312 billion, Rs17 billion above target.

Despite these gains, total revenue growth of around 11–13 percent remains well below the annual target of Rs14.13 trillion, which requires a 20 percent year-on-year increase.

APBF Chairman Ibrahim Qureshi criticized the slow progress of FBR’s much-publicized modernization program. “Despite heavy investment in automation and digital reforms, inefficiencies and administrative loopholes persist,” he said, urging the government to rebuild institutional credibility through transparency and accountability.

Tax compliance also remains a major concern. As of September 30, only about 4 million returns had been filed—well below last year’s 7.7 million—forcing the FBR to extend the deadline by 15 days. “A culture of compliance cannot develop when honest taxpayers bear the burden while large sectors remain untaxed,” Mahmood noted.

The forum renewed calls to abolish tax amnesty schemes and bring all income sources, including agriculture, real estate, and retail, into the tax net. It also urged the government to reduce dependence on indirect taxes that contribute to inflation and to promote a progressive, growth-friendly fiscal regime.

“Pakistan is not short of policies—it is short of implementation,” Mahmood concluded. “Without bold and time-bound actions to reform the tax system, the country will continue missing IMF targets and remain trapped in cycles of borrowing and stagnation.”