• Many goods, services will now be taxed at higher rates
• Lower rates for digital payments versus cash transactions set to replace distinction between filers, non-filers
• Some relief expected for salaried persons earning around Rs100,000 per month

ISLAMABAD: Facing limited room for fresh tax measures, the Shehbaz Sharif-led coalition government has resorted to rebranding taxation — shifting from “broadening the tax base” to pursuing “equity” — in an effort to justify higher taxes on lower-income segments. This transition comes as the government eyes a record revenue target of nearly Rs14 trillion for FY26, a 22 per cent increase over projections for the outgoing fiscal year.

Tied to its commitments under the International Monetary Fund (IMF) programme, the government estimates autonomous revenue collection at Rs12.845tr, based on 4.2pc GDP growth and 7.5pc inflation.

To meet the ambitious target, the government will need an additional Rs655 billion in new tax measures and another Rs400bn through enforcement — figures expected to be finalised in Tuesday’s cabinet meeting ahead of Finance Minister Muhammad Aurangzeb’s budget speech.

The Federal Board of Revenue (FBR) faces significant challenges in meeting its tax collection targets, as doubts persist over its ability to enforce existing tax laws effectively.

Despite concerns about sluggish field operations, no substantial measures have been introduced to bolster enforcement in recent years. An initiative to provide operational vehicles to field officers was also withdrawn following backlash.

Meanwhile, Ministry of Finance officials continue to present optimistic projections, seemingly hoping for a tax windfall without acknowledging economic headwinds. Large-scale ind­us­tries remain in decline, while sectors like real estate and consumption goods bear........

© Dawn Business