Huzaima Bukhari

In a world obsessed with utility and transaction, the greatest act of rebellion is to love from a place of authenticity rather than self-erasure

The boundary between Entry 47 and Entry 50, Part I of FLL is neither blurred nor ambiguous

Pakistan's budget-making season has once again begun with familiar rituals: consultations with International Monetary Fund (IMF), Federal Board of

Through this lens, we see that the greatest courage is not found in the strength to strike back, but in the strength to stand still when the whole world expects you to move. Ameneh Bahrami did not just save Movahedi's eyes that day; she saved her own soul from being swallowed by the same darkness that claimed her sight. She chose to exist, not as a consequence of a crime, but as a testament to the fact that even in the deepest night, we have the power to light a flame.

The global economy may still move through the Strait of Hormuz, but for thousands of stranded seafarers, the world has already abandoned the human beings who keep it alive.

The impact of any potential revenue-reducing tax simplification policies introduced in the FY27 budget ahead of the implementation of the medium-term

Pakistan needs technology-based foreign direct investment to ensure export-led growth

Sales Tax Chaos & Fiscal Balkanisation Pakistan practices one of the most distorted and fragmented sales tax systems in the world. What was originally introduced in 1990 as a modern value-added taxation model gradually degenerated into a maze of overlapping jurisdictions, multiple authorities, inconsistent laws, excessive rates and coercive enforcement mechanisms that now impede economic growth rather than facilitate revenue generation. The tragedy is that despite extraordinarily high statutory rates, Pakistan still fails to collect sales tax commensurate with the size of its economy. This contradiction exposes the structural failure of the existing model which empowers Federal Board of Revenue (FBR) to collect sales tax on goods while provinces are entrusted to impose and collect sales tax on services. This demarcation has created serious contentious issues of classification of goods and services, especially where contracts of goods and services are inseparable. The standard sales tax rate on goods currently stands at 18 percent at the federal level, while provincial sales tax rates on services range from 15 to 19.5 percent. However, in the case of goods, the effective incidence historically remained dramatically lower due to exemptions, leakages, informality, under-invoicing, smuggling and administrative fragmentation. The same is true for sales tax on services due to excessive input claims etc. The recent series on this topic specifically highlighted this distortion. The Tax Reforms Commission in its final report of 2016 (marked confidential by then finance minister) acknowledged that despite a nominal rate of 17 percent at the time of preparing the report, effective incidence hovered merely around 3–3.5 percent. Even after aggressive taxation measures and repeated rate increases, effective collection remains far below statutory levels because the system framework itself is defective. Iran’s invincibility: leadership, strategy, and ideology Is Pakistan’s foreign policy caught between national interest and regime survival? Trump’s threats, the Abraham Accords, and the fear of a new war The Global Cost of War: Human Loss, Economic Damage, and a Changing World Pakistan has created a peculiar taxation regime where high nominal rates coexist with low effective collection. This is economically disastrous. Excessively high rates imposed upon a narrow and fragmented base encourage concealment, under-reporting and informal transactions. Businesses respond rationally by shifting activity outside documented channels wherever possible. Smuggling becomes more profitable. Compliance costs rise. Consumers face inflationary burdens while revenues still underperform. The state then responds with even harsher enforcement and additional rates, deepening the cycle further. This is precisely what happened in Pakistan. The constitutional restructuring following the Constitution (Eighteenth Amendment) Act, 2010 [18th Amendment] complicated matters further. Sales tax on services shifted to provinces while sales tax on goods remained with the federation. In principle, fiscal decentralisation could have strengthened federalism and improved accountability. In practice, however, Pakistan developed one of the most fragmented indirect taxation systems in the region. Multiple provincial revenue authorities emerged, each operating separate registration systems, procedures, audit mechanisms and legal interpretations. Businesses operating nationally suddenly found themselves trapped in overlapping compliance regimes. A single enterprise providing services across provinces may today confront multiple sales tax authorities simultaneously, each demanding separate registration, separate returns, separate audits and sometimes contradictory interpretations of the same transaction. This is not fiscal federalism. It is fiscal balkanization and its economic costs are enormous. Compliance expenses for businesses increased sharply. Smaller enterprises struggle to navigate fragmented procedures. Litigation multiplied because jurisdictions overlap constantly. Digital and trans-provincial services created further constitutional confusion regarding situs, territorial nexus and taxing authority. The irony is painful. At the very moment when the global economy is moving toward integrated digital taxation systems, Pakistan has unwisely fragmented its indirect taxation structure into competing bureaucratic silos. The consequences extend beyond administrative inconvenience. Fragmented sales taxation weakens documentation itself. Businesses increasingly prefer informal transactions to avoid multiplicity of compliance. Inter-provincial economic integration suffers. National supply chains become vulnerable to inconsistent taxation policies and enforcement practices. This undermines competitiveness, exports and investment simultaneously. The present model also encourages excessive dependence upon import-stage taxation. A substantial portion of sales tax on goods is effectively collected at import stage rather than through a genuinely functioning value-added chain. While this provides short-term revenue certainty, it weakens domestic documentation incentives and shifts disproportionate burden onto organised and import-dependent sectors. The distortion becomes even more severe when combined with customs duties, advance taxes and withholding provisions imposed simultaneously at import stage. The result is cascading taxation embedded throughout the production process. Pakistan’s exporters repeatedly complained about blocked refunds, delayed input adjustments and liquidity constraints arising from this defective structure. Working capital gets trapped within the taxation machinery while businesses continue facing high financing costs and energy burdens. The system thus taxes production before profitability itself materialises. Retail and wholesale sectors expose another dimension of this failure. Despite repeated point-of-sale schemes and retailer documentation campaigns, large segments of internal trade remain outside effective sales tax coverage. Successive governments announced “historic” retailer integration drives, yet most initiatives collapsed due to political resistance, excessive compliance burdens and lack of trust between traders and the state. The experience demonstrated a simple reality: documentation through coercion alone cannot succeed. Comparative international experience offers important lessons. Bangladesh recently moved toward source-based taxation models targeting retailers through upstream transaction monitoring and integrated supply-chain documentation rather than fragmented harassment-based approaches. Other federations similarly rely increasingly upon harmonised digital invoicing systems and coordinated tax administration instead of overlapping bureaucratic structures. Pakistan unfortunately continues moving in the opposite direction. Instead of harmonisation, complexity has expanded and procedural burdens have multiplied. The fragmentation has deepened to an alarming level. This structural disorder also raises serious constitutional questions. Articles 141 and 142 of the Constitution define legislative competence between federation and provinces. However, many recent taxation disputes reveal increasing jurisdictional overlap and attempts at extra-territorial taxation by provincial authorities. Businesses operating digitally or across provincial boundaries often face uncertainty regarding actual tax liability and situs rules. This uncertainty itself discourages investment and formalisation. A modern economy cannot function efficiently where indirect taxation resembles competing toll barriers within the same federation. Pakistan

The evolution of elder care into an efficiency-driven digital system is replacing genuine human connection with automated empathy, reducing ageing individuals to managed users and eroding the moral fabric of intergenerational life

When historians examine Pakistan’s fiscal trajectory during the last decade, they will certialy conclude that one of the most significant transformations occurred not in income taxation, sales taxation or customs duties, but in the extraordinary rise of the petroleum levy (PL), ehanced and imposed since 2018 unconstitutionally through Money Bills, while claimed as non-tax source falling outside the purview of Aricle 160 of the Constitution. The development received surprisingly little public attention and/or debate from intelligentia (sic) and self-acclaimed all-knowing vizards despite its profound constitutional, economic and political implications [for history and evolution of PL kindly read: Budget 2027 & Challenges—II: IMF, petroleum levy & constitutional theft, Minute Mirror, May 19, 2026 and Unconstitutionally Levying A Petroleum Levy, Friday Times, June 15, 2024]. Pakistan’s fiscal crisis is often attributed to inadequate taxation. The reality is more complex. Increasingly, the state has chosen to finance itself through mechanisms that bypass the constitutional principles of fiscal federalism embodied in the National Finance Commission (NFC) framework. No example illustrates this trend more vividly than the PL. The latest International Monetary Fund programme reportedly envisages PL collections of approximately Rs. 1.73 trillion in the forthcoming budget for fiscal year (FY) 2026-27. That figure would have appeared unimaginable only a few years ago. However, it represents the logical culmination of a trend that has steadily accelerated under successive governments. The following official data, extracted from Ministry of Finance Fiscal Operations Statements, reveal the remarkable growth of petroleum levy collections: Fiscal Year Petroleum Levy (Rs billion) Increase (%) Multiple of FY2015-16 2015-16 149.290 — 1.00 2016-17 166.697 11.7% 1.12 2017-18 178.874 7.3% 1.20 2018-19 206.308 15.3% 1.38 2019-20 293.681 42.3% 1.97 2020-21 424.654 44.6% 2.84 2021-22 127.529 -70.0% 0.85 2022-23 579.910 354.7% 3.88 2023-24 1,019.223 75.8% 6.83 2024-25 1,220.213 19.7% 8.17 The figures tell a remarkable story. The Treaty the World Learned From and is Now Losing Tax Proposals Budget 2027—V Fiscal federalism: Missing link of tax reform The City between Prayers Honour killings and the tyranny of public opinion PL collections increased from Rs. 149 billion in FY2015-16 to Rs. 1.22 trillion in FY2024-25, representing growth of more than 717 percent within nine years. Even more striking is the post-FY2022 trend when sales tax was notified as zero rate and PL rates were enhances astronomically. Collections surged from Rs. 127.5 billion in FY2021-22 to Rs. 1.22 trillion in FY2024-25—an increase of approximately 857 percent in just three years. No major federal revenue stream has expanded at a comparable pace. This development would be less controversial if PL formed part of the divisible pool under Article 160 of the Constitution. It does not. Unlike income tax, sales tax and certain other federal taxes distributed through the NFC Award, PL proceeds remain entirely with the federal government. Provinces receive no share despite the fact that petroleum products are consumed throughout the country and despite the fact that inflationary consequences are borne by citizens in every province. This distinction lies at the heart of the constitutional debate. The Constitution envisages cooperative fiscal federalism. The NFC mechanism was specifically designed to ensure equitable sharing of national resources between the federation and provinces. PL, however, increasingly allows the federation to generate revenues outside that framework without following the supreme lae of the land. The practical consequence is obvious. A growing proportion of federal revenue originates from sources that bypass provincial sharing arrangements altogether. The issue becomes even more significant when examined alongside the treatment of petroleum products under the sales tax regime. For years, governments increasingly relied upon PL while maintaining negligible or zero effective GST on major petroleum products through executive measures. The consequence was that revenues which would ordinarily enter the divisible pool and become shareable with provinces were effectively replaced by revenues retained exclusively by the federation. This trend deserves serious constitutional scrutiny. Articles 160, 161 and 162 of the Constitution were never intended to permit fiscal engineering that undermines the spirit of resource sharing while formally complying with legal requirements. The broader economic implications are equally troubling. PL is among the most regressive forms of revenue mobilisation available to any government. It does not distinguish between wealthy and poor consumers. It does not consider ability to pay. It applies equally to industrial production, public transport, agriculture and household consumption. Every increase in PL raises transportation costs that leads to raise cost of production. Every increase in production costs eventually appears in consumer prices. The burden therefore cascades throughout the economy. Unlike progressive taxation, which targets income and wealth according to capacity, PL taxes necessity. A labourer travelling to work, a farmer operating agricultural machinery and a corporation managing logistics all face higher costs because the levy is embedded within fuel prices. This explains why PL collections frequently rise alongside inflation. Inflation itself becomes a revenue-generating mechanism. It is a tax without legislation! The state receives higher collections while households experience declining purchasing power. The contradiction is particularly stark when viewed against the background of the preceding articles in this series. Part I demonstrated that Pakistan imposes high taxes yet generates low yields because the base remains narrow. Part II argued that meaningful reform requires modernisation of tax administration. Part III showed how withholdingisation transformed taxation into transactional extraction. Part IV highlighted untaxed wealth and protected elites. Part V examined the chaos of fragmented sales taxation. Part VI explored the constitutional weaknesses of fiscal federalism. The PL phenomenon brings all these themes together. The federation increasingly depends upon a regressive and non-divisible revenue source because genuine tax reform remains politically difficult. Taxing fuel is administratively easier than documenting wholesale trade. Increasing levy rates is simpler than reforming Federal Board of Revenue (FBR). Collecting from consumers is politically easier than taxing powerful interest groups. Consequently, structural reform is postponed while indirect extraction expands. This path is economically unsustainable and constitutionally questionable. Pakistan’s tax potential lies elsewhere. It lies in documentation of retail and wholesale trade and in rational property taxation. It lies in effective taxation of large