The angel number, ‘1010’, is an enigmatic combination of numerology and spiritual circles. The number 1 signifies fresh starts, while 0 represents infinite potential. Together, they indicate a phase of personal or spiritual transformation. Whether one believes in such esoteric knowledge is a personal choice, but when it comes to the governmental state of affairs, this number certainly signifies a lot.
The angel number, ‘1010’, is an enigmatic combination of numerology and spiritual circles. The number 1 signifies fresh starts, while 0 represents infinite potential. Together, they indicate a phase of personal or spiritual transformation. Whether one believes in such esoteric knowledge is a personal choice, but when it comes to the governmental state of affairs, this number certainly signifies a lot.
Recently, the Federal Board of Revenue (FBR) endeavoured to procure 1010 vehicles worth Rs6 billion. The procedure was objected to by the Senate’s Standing Committee on Finance and then defended by the chairman of the FBR, who argued that sales tax cannot be collected without site visits. And thenceforth, it was approved, thanks to the chairman’s adamant temperament, with an additional 77 new vehicles totalling 1100 for grade 17 and 18 officers.
But is this procurement a watershed event heralding prosperous revenue mobilisation? Unlikely. When asked about plugging the gap in the budgeted collection, the chief responded, “I am not a fortuneteller.” One can imagine from this remark how deeply mired the system is when even its revenue head is either cynical or perhaps sceptical of its success. Both are equally pathetic.
As the chairman himself briefed, since 2008, post-inflation adjustment, there has been no impressive growth in revenue collection despite a meteoric increase in tax rates under all regimes of income and sales tax. In 2008, total government expenditure stood at Rs 2.27 trillion, whereas by 2024, it had skyrocketed to Rs20.47 trillion -- an alarming increase of 802 per cent. In comparison, tax collection, which was Rs 1.05 trillion in 2008, has only grown to Rs9.2 trillion (missing the budgeted target) in 2024, marking a 786 per cent rise only.
While government expenditures have skyrocketed, revenue collection has not kept pace. The middle-class salaried segment, pouring in 300 per cent more taxes than exporters in the first half of the current fiscal year, is being squeezed by each passing finance bill. In some cases, they are working more than half a year just to pay taxes due to the heightened tax slabs and unflinching presumptive withholding regimes, where, rather than taxing income, transactions are taxed -- further discouraging documentation in the economy, as evident from the recent Rs9.4 trillion in cash circulation.
Total tax collection is estimated to derive around 80 per cent from such indirect measures (including withholding regime), whose axe is far more acidic for the poor. These taxpayers, already subjected to vitriolic inflation and stagnant wages for years, are being pushed further into a vicious cycle of poverty and stunted human development, as reflected in Pakistan’s dismal ranking on the latest Human Development Index (164th out of 193 countries vis-a-vis 154th in 2020). Meanwhile, elites often either connive with shrewd accountants and unscrupulous revenue officers to minimise their tax liability or, worse, remain entirely outside the documented economy.
One can easily and immediately calibrate the albatross of structural failures and greater lacunae in our fiscal canvas by the fact that, largely as an institution, the FBR has failed to improve the tax-to-GDP ratio, which stands at a pathetic 8.7 per cent -- far behind Azerbaijan’s 18 per cent, Bangladesh’s 7.8 per cent, Cambodia’s 13.5 per cent, Sri Lanka’s 13 per cent, and the 28 per cent and above observed in mature Western economies. As per the FBR’s annual performance report, the tax population is 13.4 million, but only six million are active filers, highlighting a glaring gap of over seven million between registered taxpayers and active ones. And needless to mention, the hiatus between the active and the real tax population, caused by the spectre of the undocumented economy, is as lively as ever.
In the short term, a unified VAT system requires a federal-provincial consensus on administration, governed by a board representing all federating units, with revenue distribution per the 18th Amendment; this body could also oversee an integrated income tax system
Historically speaking, despite receiving substantial support from Multilateral Development Agencies (MLDAs) like the ADB, World Bank, and consulting firms like McKinsey -- that have collectively disbursed over $3.8 billion in loans, technical assistance, and grants for fiscal reform projects -- the revenue function has seen little to no improvement. The World Bank’s $400 million ‘Pakistan Raises Revenue’ (PRR) project, approved in 2019, has already disbursed around 80 per cent of its funds, yet the revenue system remains as dysfunctional as ever -- signifying how poorly template-like reforms, implemented with little to no indigenous political will, have performed.
At the same time, the government remains extravagantly wasteful. Pakistan’s state-owned enterprises (SOEs) incurred staggering losses of Rs408 billion in just the first six months (July-December) of the fiscal year 2024, bringing total accumulated losses since 2014 to a staggering Rs5.9 trillion. Pension liabilities have ballooned to over Rs1 trillion in Budget2025, with Rs260 billion allocated for civil servants and Rs750 billion for the armed forces; unfunded pension liabilities are now estimated at Rs30-35 trillion.
The recent outrageous increase in the salaries of Punjab Assembly members and the recent NA’s finance committee proposal (legislators’ salaries may jump from Rs180,000 to Rs519,000), coupled with current expenditures standing at Rs3.54 trillion in just the first quarter (July-September) -- violating the 20 per cent fiscal threshold -- is a debacle par excellence, showcasing the entrenched elitism coded in the DNA of the political echelons.
This massive mismanagement of public funds unreels the cosmetic fiscal austerity, sordid rent-seeking and hauntingly bad governance; thus causing the sequestration of pro-growth development expenditure: according to official data for the first half of FY2025 (July-December 2024), total development spending amounted to approximately Rs148 billion -- just 12.4 per cent of the twice-reduced PSDP of Rs1.1 trillion and barely 10.5 per cent of the original Rs1.4 trillion budgetary allocation announced in June last year.
And so, this is the context lurking behind why the pauper populace is jarred and infuriated. We need reparation of this madness. Our angel number (salvation) is nothing but structural reforms and institutional development. Take the sales tax, upon which the entire vehicle procurement controversy erupted. Both PIDE and PRIME emphasise key reforms: eliminating exemptions that cause revenue loss, fully digitising businesses to broaden the tax base, and integrating all businesses into the VAT system through policy and administrative measures.
In the short term, a unified VAT system requires federal-provincial consensus on administration, governed by a board representing all federating units, with revenue distribution per the 18th Amendment; this body could also oversee an integrated income tax system. In the long run, a constitutional amendment would be needed to reassign revenue functions, leveraging digital transformation for efficiency and introducing new provincial revenue sources to enhance accountability.
In the end, the enigma of ‘1010’ in Pakistan’s fiscal governance is not divine but a reflection of systemic mismanagement. Superficial measures like vehicle procurements won’t fix revenue stagnation. Without structural reforms, tax compliance will falter, fiscal space will shrink, and inequality will deepen. The real challenge lies in institutional integrity, political will and genuine policy overhaul.
The writer is a Peshawar-based researcher who works in the financial sector.