Federal Board of Revenue (FBR) Chief Commissioner Aftab Alam, in a recent address at the Association of Builders and Developers of Pakistan (ABAD) House in Karachi, emphasized the urgent need to increase Pakistan’s tax-to-GDP ratio in order to reduce the national debt and stimulate economic progress.
Highlighting regional disparities, Alam noted, “India’s tax-to-GDP ratio stands at 17%, while Pakistan’s lags behind at just 9%.”
Meanwhile, Finance Minister Muhammad Aurangzeb has projected that Pakistan’s tax-to-GDP ratio will rise to 10.6% by the end of the current fiscal year—an important step toward the government’s goal of achieving 13% by the end of the 37-month Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF). The IMF, in its recent review, estimated Pakistan’s total tax revenue at 12.6% of GDP for FY2024-25, with FBR collections expected to reach 10.7%.
Broadening the Tax Base is Critical
Aftab Alam acknowledged that the existing tax burden falls disproportionately on a limited number of taxpayers. He stressed the necessity of expanding the tax base to include more contributors. Drawing a national parallel, he remarked, “In times of conflict, the Pakistan Army protects the nation. Now, it’s our duty as citizens to support the country by paying our fair share of taxes.”
Real Estate Sector Seeks Tax Reforms for Stability and Growth
ABAD Chairman Muhammad Hassan Bakshi echoed similar concerns, noting that Pakistan is currently engaged in an economic struggle, and that investment—particularly in the construction sector—will be key to revitalizing the economy.
He emphasized that nearly 50% of the $34 billion remitted by overseas Pakistanis is invested in the construction industry. “The construction sector is Pakistan’s largest employment generator, with 72 allied industries depending on it. If we want sustainable tax revenue and employment growth, we must prioritize this sector.”
Bakshi urged the FBR to implement long-term, consistent, and transparent tax policies to attract both domestic and foreign investment. He warned that frequent changes in tax laws create uncertainty and discourage investors.
Call for Coordination & Valuation Reform
To improve regulatory coordination, Bakshi requested the appointment of a dedicated FBR focal person at ABAD House. He also raised concerns over the issuance of tax notices to builders and developers, recommending that ABAD be notified of such notices to facilitate legal support.
The ABAD Chairman revealed that in Karachi’s South District alone, over 50 real estate projects—collectively valued at $5 billion—are ready for investment. He called on the government to ensure stability in taxation to unlock this investment potential.
Government Housing Scheme Could Boost Revenues
Bakshi also highlighted a forthcoming subsidized housing finance scheme, which would allow homebuyers to pay just 20% upfront, with the remaining 80% covered through affordable installments. He estimated that this initiative could generate trillions in tax revenue for the FBR while addressing the country’s housing shortage.
