Towards shared responsibility in reviving Pakistan’s economy

LAHORE: The trade and industrial sectors raise several valid concerns, but these are sometimes undermined when calls are made for broad concessions that may be economically unsustainable or counterproductive in the long term.

Rather than pursuing blanket exemptions, there is an opportunity for these sectors to work collaboratively with the government to address structural challenges such as tax evasion, smuggling, lack of documentation, governance gaps and policy inefficiencies. For example, the request to apply a uniform sales tax on yarn imports by exporters is well founded. However, proposals to exempt the entire textile value chain from sales tax risk reviving past issues, such as the misuse of invoicing systems.

Concerns over delayed tax refunds are widely shared, and many businesses report facing difficulties, including bureaucratic hurdles. Industry leaders could play a proactive role by compiling data on refund timelines -- highlighting both timely disbursements and problematic delays -- and by proposing improvements based on best practices from comparable economies. Transparency mechanisms and fair accountability processes can also help address grievances related to misconduct.

It is broadly acknowledged that challenges such as corruption can hinder economic efficiency. Strengthening institutional integrity and reducing opportunities for rent-seeking behaviour -- on both public and private sides -- would benefit all stakeholders. More constructive engagement from the business community in this area could drive systemic reform and build greater trust.

Low tax revenues remain a persistent issue. Improving tax compliance across all segments of the economy could help broaden the revenue base, enabling more equitable tax rates and reducing pressure on essential services. Informal financial flows and parallel exchange systems, such as ‘hundi’, continue to pose policy challenges. Ensuring regulatory clarity and fairness in enforcement would help create a more level playing field for all participants.

Although traders contribute significantly to GDP, their share of tax revenues remains relatively low. Past attempts to enhance compliance have had limited success. A more consultative approach, involving trader associations in the design of simplified tax regimes, could encourage broader participation. Similarly, transporters -- another vital part of the economy -- could also benefit from structured dialogue aimed at fostering better alignment with national tax goals.

There is also scope for reassessing the taxation of capital markets and real estate, sectors that have seen considerable growth over the past two decades. A consistent income tax policy, applied equitably across asset classes, could enhance revenue collection while promoting fairness.

Smuggling and informal trade continue to present serious challenges to the country’s productive sectors. Encouraging improved market oversight, coupled with capacity-building for enforcement agencies, could support efforts to curb these practices. Transparent procedures and stakeholder engagement can help ensure that compliance efforts are effective and equitable.

Overall, greater partnership between the public and private sectors -- based on mutual accountability and reform -- can pave the way for a more resilient and inclusive economic future.