“We are not a welfare state; we lack the institutional nervous system, the documentation, and the moral contract to sustain one. Yet, our fiscal policy remains obsessed with squeezing the productive few to fund a bloated, unproductive bureaucracy. By early 2026, this taxation, under the disguise of collecting revenue, has strangled a resilient, hardworking population under the weight of a welfare-level tax regime without a single welfare benefit in return”—Muhammad Ammar Ansari, The Prohibition Zone: Why Pakistan’s Tax Policy is Cannibalising Growth.

“Taxes are important for other reasons that I will explain in this book. But the idea that taxes pay for what the government spends is pure fantasy… We can’t use deficits to solve problems if we continue to think of the deficit itself as a problem… Taxes are critically important, but there’s no reason to assume the government must raise taxes whenever it wants to invest in our economy…. Raising taxes when it’s not necessary can undermine fiscal stimulus, and raising the wrong kind of taxes can leave a nation vulnerable to accelerating inflation”—Stephanie Kelton, The Deficit Myth.

The above quotes aptly expose the dilemma of our successive governments—civil and military alike—in imposing higher and regressive taxes, pushing the overwhelming majority of citizens towards an unbearably high cost of living. Adding insult to injury, the state provides nothing in terms of welfare and has total apathy towards the economically vulnerable segments of society.

Pakistan’s fiscal crisis is not simply about deficits and numbers. It is about a broken social contract—a growing disconnect between what citizens pay and what they receive. High taxation without welfare delivery has not only failed to generate effective revenue but also has eroded trust, discouraged investment, and weakened the formal economy.

True fiscal health lies in building a fair, transparent, and service-oriented tax system that expands the base, rewards productivity, and restores public trust. Anything less condemns the country to stagnant growth under the weight of taxation without benefit—a burden Pakistan can no longer afford.

Pakistan’s growth failure is often explained through familiar clichés: low productivity, weak exports, lack of innovation, or insufficient entrepreneurship. These are symptoms, not causes. The real problem lies deeper—in a state-engineered cost structure that has made doing business prohibitively expensive and structurally irrational.

A recent private sector analysis reported by Nikkei Asia has quantified what businesses have been saying for years: operating a business in Pakistan is 34 percent more expensive than in comparable South Asian economies. This single statistic is not merely an indictment of policy; it is a post-mortem of........

© The Friday Times