Economists and academics continually seek innovative tax ideas. Led by international financial institutions (IFIs) and their consultants, the prevailing goal in many studies is to tax everything in sight.
A recent example is a study claiming “surprisingly” high public support for wealth taxes in Pakistan. Before this translates into real policy, it deserves serious scrutiny. At first glance, the findings suggest a growing consensus in favour of progressive taxation. But a deeper look reveals a disquieting, predictable pattern: donor-funded research driven more by global ideological templates than by Pakistan’s economic realities or reform priorities.
The first question is: why now? In a country grappling with severe economic distress, mounting debt, institutional dysfunction, a stagnating private sector and crumbling public services, is the question of wealth taxes on savings and inheritance truly urgent? Or is this simply a programmed narrative, externally financed and designed to generate support for pre-determined donor preferences?
Let’s examine the proposal. A wealth or inheritance tax with a threshold of Rs10 million may sound progressive, but in today’s Pakistan, that figure (around $33,000) reflects the modest savings of professionals and the middle class – even excluding primary residences. This is not elite wealth by any stretch. It’s often the equivalent of a car seen routinely on Pakistani roads. These assets are not unearned windfalls but are hard-earned, after-tax accumulations. Taxing them further is not an attack on privilege; it penalises prudence, discourages savings and undermines investment, harming the broader economy.
Wealth is not some nebulous pool of greed. In Pakistan’s urban and diaspora-supported economy, it often reflects accumulated savings. People work, pay income tax, forgo luxuries and save – often to build a home, educate their children or prepare for retirement in a country with no meaningful welfare system. Wealth taxes punish this behaviour. They amount to a double tax – first on income, then again on the resulting savings. The message is clear: if you save, we will tax you again.
What makes the survey particularly disturbing is the apparent bias in its design, which seems to be tailored to endorse predetermined conclusions. With a loaded prompt like, ‘Should the rich pay more to help the poor?’ the response is predictable. This is hardly a serious policy question. It is a moral prompt.
Respondents are not presented with neutral scenarios that outline the economic and administrative costs, risks of evasion, capital flight or the fact that many middle-class families cross the proposed threshold. Nor are they told that most countries that have tried wealth taxes eventually abandoned them because they failed to deliver either revenue or justice. This is less about gauging public sentiment than manufacturing consent.
There is an unmistakable ideological agenda here, a classic donor-driven policy prescription. Design a study, wrap it in the language of fairness and equity and legitimise it by publishing it in a respected newspaper. However, the questions aren’t neutral, the objectives aren’t local and the implications aren’t thoroughly considered in the context of Pakistan’s complex fiscal and institutional landscape.
If intergenerational equity is truly the goal, a more feasible and equitable policy would be an inheritance tax. Some argue that a wealth tax is merely the annuitised version of an inheritance tax. We regard it as a bad tax; it penalises savings during the accumulation phase and, in present value terms, punishes citizens more harshly. It undermines the objective of incentivising individuals to create wealth, contribute to society and support upward mobility.
An inheritance tax, properly structured, could target wealth above Rs5 billion. That’s where dynastic entitlements and entrenched privilege reside. Instead, the proposed wealth tax threatens professionals, small business owners and overseas Pakistanis who invest in their homeland.
In Pakistan, where asset valuation is arbitrary, enforcement is weak and institutional trust is low, a wealth tax is dangerous. It opens the door to harassment, rent-seeking, and concealment.
Meanwhile, the largest landholder in Pakistan – the state itself – is never part of the wealth tax conversation. Across over 1,000 cities and towns, government agencies control the most valuable urban land: in cantonments, secretariats and elite residential colonies for bureaucrats and military officers. These holdings are underutilised, untaxed and politically untouchable. The state’s wealth is sacred. Only the citizen’s savings are fair game.
The ideological tilt is glaring. International donors routinely promote a soft-socialist agenda, repackaged as justice and equity. They assume the existence of functional institutions, formal economies and high compliance. But in Pakistan, none of those conditions exist. Rather than promoting redistribution, such policies fuel resentment, expand informality and erode trust in the state.
If the real goal is revenue and fairness, better options exist. The government can monetise idle public land. It can simplify tax codes, eliminate exemptions and audit the bloated pension and salary structures that bleed public funds. But such reforms are less fashionable than a donor-led push for wealth taxes.
Ultimately, this is not about fiscal reform but rather narrative control. It is easier to publish surveys that claim Pakistanis support taxing the rich than to undertake meaningful structural reform. But slogans don’t build economies.
Real reform means confronting untaxed state privilege, elite landholding and rent-seeking, not squeezing more out of a struggling middle class. If we are serious about equity and justice, we must start by rationalising the state
Nadeem Ul Haque is the former deputy chairman of the Planning Commission.
Shahid Kardar is the former governor of the SBP.