Pakistan’s struggle to meet its revenue targets is increasingly being linked not to economic weakness but to the absence of effective, country-wide targeted enforcement, particularly at the provincial level, where enforcement powers largely reside. The expert argued that unless provincial authorities actively exercise these powers and enforce them at the retail level, illicit trade will continue to undermine federal revenues and distort the economy.
During the first half of the current fiscal year, the Federal Board of Revenue (FBR) recorded a revenue shortfall of Rs330 billion against its target. This gap reflects the scale of undocumented economic activity rather than a slowdown in business. Sectors such as real estate, tobacco, pharmaceuticals, tea, and tyres continue to operate largely outside the documented framework, shifting the tax burden onto a narrow base of compliant taxpayers.
The expert said that provincial-level enforcement has a direct macroeconomic impact on federal revenue performance. When enforcement is carried out effectively at this level, its effects extend nationwide across supply chains. However, despite having the mandate, provinces have struggled to implement sustained and coordinated enforcement, weakening the overall impact of anti-illicit trade efforts.
As a result, enforcement remains fragmented and is often confined to selective retail checks. Such limited actions deliver little meaningful impact. Without comprehensive, country-wide targeted enforcement at all levels, including production, distribution, and retail, expectations of significant revenue gains remain unrealistic.
Macroeconomic analyst Osama Siddiqui said the government can still achieve its tax targets if they prioritize targeted, nationwide enforcement and documentation. “The solution lies in plugging tax leakages and enforcing existing laws through targeted crackdowns rather than burdening the already taxed sector,” he said, adding that curbing smuggling and documenting untaxed sectors could substantially improve revenue collection.
He also highlighted the weak implementation of the Track and Trace System across industries as a clear indicator of limited institutional resolve in tackling illicit trade.
The expert added that the sustainable fiscal future depends on shifting policy away from repeatedly taxing those already compliant toward capturing revenue from the untaxed economy through consistent, coordinated, and targeted enforcement at both provincial and national levels. Without serious enforcement beyond isolated retail measures, experts warn that revenue gaps will persist, keeping the economy under continued financial strain and delaying recovery.
