Virtuous cycle

It is estimated that less than 5 per cent of the country’s adult population files their tax returns. This indicates a significant gap in tax compliance, with the vast majority remaining non-filers. By bringing all adult citizens into the formal tax system, the government will gain comprehensive visibility into the financial standing of individuals, allowing better assessment and correlation of declared income with owned assets. While many individuals may initially file nil returns, this act of compliance will still convert them into active filers, paving the way for them to participate fully in economic activities and contributing to a culture of responsible citizenship.

To encourage broad-based participation and sustained compliance, the government should introduce tangible incentives for filers. By aligning public benefits with tax compliance, the government can build trust and create a virtuous cycle. The more citizens that become filers, the more revenue that is generated, which in turn can be reinvested into essential public services.

Muhammad Abdus Samad

Islamabad