Why Pakistan is struggling to collect taxes from millions of its own citizens

Pakistan faces significant economic instability, including a near-default in 2023, largely driven by chronically low tax revenue. This episode examines why millions of residents avoid income taxes and the strategies the government is deploying to address this widespread issue.

The country's fiscal challenges are symptomatic of a broader struggle common among lower- and middle-income nations. With a vast portion of the population opting out of the tax system entirely, the government is left with insufficient resources to stabilize the economy.

The ongoing effort to broaden the tax base is a critical attempt to move past the economic volatility that nearly pushed the nation into default in 2023. Understanding these dynamics offers insight into the complex relationship between state capacity and economic survival in developing economies.

Source: How Pakistan is revving up a fight against tax dodgers | The Indicator