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Pakistan Taxes Productive Few to Fund Bloated Bureaucracy, Report Says

A new report criticizes Pakistan's fiscal policy for placing the entire tax burden on a tiny, documented segment of the productive workforce to fund an unproductive bureaucracy. This system taxes salaried professionals at high rates while they still pay for private security, power, and education, breaching the social contract. The consequence is a projected exodus of 800,000 skilled professionals by 2025 who feel crushed by current policies. The report argues that high tax rates on a microscopic base cause stagnation and protect the shadow economy, contrary to IMF and state technocrats who defend the approach due to a massive fiscal deficit.

Key Points: Pakistan's Fiscal Policy Squeezes Taxpayers, Fuels Brain Drain

  • Only 4% of workforce are effective taxpayers
  • 800,000 skilled workers expected to leave by 2025
  • Tax policy called a "luxury premium" for breached social contract
  • IMF and technocrats defend extraction due to massive debt
  • Report argues high rates cause economic stagnation
2 min read

Pakistan's fiscal policy squeezes the productive few to fund a 'bloated' bureaucracy

Report reveals Pakistan's tax burden falls on 4% of workforce, funding bureaucracy and driving skilled professionals into exile by 2025.

"We are not a welfare state; we lack the institutional nervous system, the documentation, and the moral contract to sustain one. - Business Recorder report"

New Delhi, Feb 7

Suffering from a profound identity crisis, Pakistan has thrown tax burden onto a population that receives the public services of a medieval fiefdom, according to a new report.

A report in Business Recorder reveals that Pakistan's fiscal policy remains obsessed with squeezing the productive few to fund a "bloated, unproductive bureaucracy".

"We are not a welfare state; we lack the institutional nervous system, the documentation, and the moral contract to sustain one," it adds.

According to the report, the country has only 3.4 million effective taxpayers - a mere 4 per cent of the 85.6 million-strong workforce funding the entire state.

"Having forced this captive minority to bridge a multi-trillion rupee deficit while the informal elite remain untouched, we have classified excellence as a taxable offence and transparency as a path to insolvency," the report laments.

When a salaried professional is taxed at 35% but must still pay out-of-pocket for private security, power, and education, the government is effectively charging a luxury premium for a social contract it has already breached.

"The outcome of that is already seen in the form of 800,000 skilled architects of our future economy leaving Pakistan by 2025 who had no choice but to either be crushed under our current policies or go into exile," according to the report.

However, the IMF and state technocrats argue that the fiscal deficit leaves us no choice.

They argue that with debt-servicing requirements nearing Rs 9 trillion, the state must extract every possible rupee from the documented sector.

"This logic is fundamentally flawed. You do not foster a forest by chopping the only trees that manage to grow," says the report.

High rates on a microscopic base are the cause of our stagnation, not the cure, it says, adding that by maintaining such high rates, the state ensures the "shadow economy" remains in the shadows.

True fiscal solvency is a product of volume and trust, not the velocity of extraction, according to the report.

- IANS

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Reader Comments

S
Sarah B
The line about "charging a luxury premium for a social contract it has already breached" is so powerful. It perfectly describes the frustration of the middle class when the state fails to provide basic services. This is a cautionary tale for all developing nations.
A
Aditya G
While the situation seems dire, we in India should look at this introspectively. We also have a massive informal economy and sometimes our tax policies can feel burdensome on the salaried class. The principle of "volume and trust" over "velocity of extraction" is key for us too. We need to broaden the base, not just increase the rate.
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Priya S
Only 3.4 million taxpayers for such a large population? That's unsustainable by any metric. The report is right – you foster a forest by encouraging more trees to grow, not by punishing the few tall ones. Their loss is other countries' gain, sadly. 😔
R
Rahul R
The identity crisis mentioned at the start is the root cause. When a nation's priorities are misaligned – funding a massive military and bureaucracy over public welfare and ease of business – this is the inevitable result. The common citizen always pays the price.
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Nikhil C
Respectfully, while the analysis is sharp, the article's tone feels a bit one-sided. The IMF's point about a massive debt burden (Rs 9 trillion!) is a real constraint. They are in a fiscal trap with no easy way out. Still, the policy approach seems self-defeating in the long run.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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