Business
Budget: need for simplified taxation | The Express Tribune
ISLAMABAD:
“At the beginning of a dynasty, taxation yields large revenue from small assessments. At the end, taxation yields small revenue from large assessments” – Ibn Khaldun.
Ibn Khaldun wrote these lines centuries ago, long before the arrival of missions of the International Monetary Fund (IMF), quarterly review meetings and “mini-budgets”. He nevertheless understood something that modern fiscal bureaucracies still struggle to learn: when a state loses confidence in growth, it begins taxing survival instead of prosperity. Another IMF team is in Islamabad for discussions on the federal budget for fiscal year 2026-27 under the ongoing $7 billion 37-month Extended Fund Facility (EFF). One can almost predict the choreography in advance.
Revenue target of the Federal Board of Revenue (FBR) will rise heroically (more than Rs15 trillion!) with additional taxes of Rs250 billion plus. Tax-to-GDP projections will become optimistic again. Additional withholding taxes will appear disguised as documentation measures. New levies will be described as temporary necessities. The formal sector will once more be congratulated for its patriotism while being prepared for another round of extraction.
Pakistan does not need confrontation with the IMF. It needs something far more difficult: the confidence to present a credible reform plan capable of achieving primary surplus targets without strangling the productive economy.
For nearly two decades, fiscal policy has followed a remarkably consistent philosophy: if revenue falls short, raise rates; if growth slows, impose additional withholding taxes; if documentation weakens, burden those already documented. This approach has produced the strange spectacle of a country trying to achieve growth by systematically exhausting the very sectors capable of generating it. The outcome is visible everywhere. Investment remains weak, industrial expansion slows, exporters struggle to remain competitive and the informal economy continues to flourish with admirable immunity from official enthusiasm for taxation. Pakistan’s fiscal crisis is no longer simply about insufficient revenue. It is about an outdated tax structure built for extraction rather than growth.
The existing system resembles an administrative federation of tax notices. The federation collects income tax, customs duties, federal excise and sales tax on goods. Provinces collect sales tax on services, agricultural income taxes, property-related levies and numerous other charges.
Businesses operating nationwide navigate multiple registrations, overlapping audits, conflicting definitions and competing jurisdictions. A taxpayer operating across Pakistan often requires more energy to understand tax administration than to run the actual business. The state then expresses surprise at the persistence of informality.
This fragmentation imposes enormous economic costs. Compliance becomes expensive, litigation multiplies and documentation loses its attraction. Pakistan has gradually developed a taxation structure that penalises formalisation while rewarding invisibility.
The burden falls overwhelmingly on a narrow segment of the economy. Estimates frequently cited in business and policy circles suggest that nearly 80-85% of federal income tax and sales tax collection originates from roughly the top 1,000 to 1,200 corporate entities. Banks, telecom companies, oil and gas firms, organised manufacturers and exporters continue carrying the fiscal system on their backs while vast undocumented sectors remain comfortably outside meaningful taxation.
No country can sustainably tax the same compliant sectors into permanent prosperity. Even a milking cow eventually develops constitutional objections. The solution lies not in additional taxation but in structural reform. Pakistan requires a simplified federalised tax system based on coordination, harmonisation and lower rates rather than administrative fragmentation and fiscal extortion. This does not require dismantling the provincial autonomy or reversing the 18th Amendment. Constitutional federalism and administrative coordination are not enemies. Modern federations function precisely through integrated tax administration while preserving subnational fiscal rights.
Canada offers one example. Federal and provincial tax systems operate through harmonised compliance arrangements that minimise duplication. Australia relies on coordinated federal-state fiscal administration to reduce compliance costs and preserve market integration. Even the United States, where states possess extensive taxation powers, constitutionally restricts fragmented taxation that could disrupt interstate commerce.
Pakistan’s economy today is far more integrated than its taxation structure. Banks operate nationally. Telecom companies function through nationwide networks. Oil and gas companies move through integrated supply chains. Logistics firms, airlines and industrial groups operate across provincial boundaries as unified commercial enterprises. Fragmented taxation in such an economy functions like internal customs barriers disguised as administrative procedure.
A federalised tax administration model could substantially reduce these distortions. The federation and provinces would retain their constitutional taxation powers, but administration would become integrated through a jointly governed institutional mechanism. Taxpayers would interact through unified registration systems, harmonised definitions, coordinated audits and shared databases. The beauty of such reform is that it creates space for what Pakistan desperately needs: lower and simpler taxes. Pakistan’s current tax structure increasingly resembles punishment for visibility. Corporate taxation becomes punitive once super tax, minimum taxes, workers’ welfare obligations and indirect levies are combined. Sales tax rates remain among the highest in Asia despite the absence of Scandinavian welfare structures, Scandinavian public services or Scandinavian governance. Only the tax ambitions occasionally resemble Northern Europe.
High rates imposed on a narrow base inevitably encourage evasion, underreporting and capital flight. Lower and simpler taxes imposed across a broader base create more sustainable outcomes. Asia’s successful economies understood this long ago. China, Japan, Singapore, Malaysia, Indonesia and Vietnam pursued growth-oriented taxation strategies centred on moderate rates, administrative simplicity and export competitiveness. Their systems were designed to encourage investment and documentation rather than maximise short-term extraction from already compliant sectors or exorbitant levies on petroleum products.
Pakistan, by contrast, drifted toward a taxation regime increasingly dependent on withholding taxes deducted at source regardless of profitability. These taxes were originally designed as collection tools. They gradually evolved into substitute taxes imposed on transactions instead of actual income. Low-margin businesses and sometimes even loss-making enterprises are taxed as though they were extraordinarily profitable. Meanwhile, large undocumented sectors continue their patriotic contribution to the national economy through moral support. Agricultural income taxation remains politically paralysed despite repeated promises. Property taxation remains underdeveloped despite massive speculative gains in real estate. Informality expands while documented sectors finance the state with admirable consistency and diminishing enthusiasm.
Technology alone cannot solve these problems. Digitalisation imposed upon a structurally irrational system merely accelerates irrationality. Sustainable reform requires simplification, legal certainty and administrative coordination. The IMF’s primary concern is fiscal sustainability, not the preservation of dysfunctional tax structures. Pakistan therefore possesses an opportunity to present a credible alternative model capable of achieving programme targets through growth, documentation and integration rather than perpetual rate increases.
The upcoming budget can either repeat the familiar cycle or begin structural reform. One path leads toward higher rates, lower growth and deeper dependence. The other requires political courage but offers the possibility of expansion, competitiveness and fiscal stability. Pakistan does not need a larger extraction machine. It needs a taxation system capable of supporting growth within a modern federal economy.
The writer is the Advocate Supreme Court, Adjunct Faculty at Lahore University of Management Sciences, member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics
Business
Fuel price hike impact: How it will change what you eat, how you travel and what you can afford
Your next trip to the fuel station just got more expensive!Fuel prices across the nation saw another revision, now becoming costlier by Rs 7.5 per litre since the Middle East crisis began. Early Monday, petrol prices were hiked by Rs 2.61 per litre, while diesel prices were increased by Rs 2.71, marking the fourth increase in just ten days.These back-to-back revisions are now raising concerns over a ripple effect on household budgets, inflationary pressures, and everyday commuting costs, leaving consumers to quietly do the math all over again.The latest round of price hikes comes against the backdrop of the ongoing conflict in the Middle East, which has tightened global energy supplies. With crude shipments under pressure and geopolitical tensions showing little sign of easing, international oil prices have been trending higher, with the impact steadily filtering into domestic retail markets.Retail fuel prices had remained largely unchanged for nearly four years before the first hike on May 15, making the sharp, fortnight-long surge in prices all the more striking.Prices continue to vary across states due to differing local taxes.
Impact of rising petrol and diesel prices
Impact on transportation
Transportation is the first and most direct sector to feel the impact of petrol and diesel price hikes. Your drive to the office, that weekend road trip, and quick grocery run — everything will now cost slightly more. With the latest increase, transporters are under significant operational pressure after four rapid fuel revisions. Fuel alone accounts for more than half of truck operating costs, and when added to rising expenses such as tires, insurance, tolls, maintenance, finance costs and statutory compliances, transport operations are now facing severe pressure on viability.“Fuel alone accounts for nearly 55% of truck operating costs. Along with increasing costs of tyres, insurance, tolls, maintenance, finance costs and statutory compliances, the viability of transport operations is under severe pressure,” one transporter told TOI.Transporters also argue that instead of repeated smaller hikes, a single transparent fuel pricing decision would allow better planning of freight structures and business viability.
Supply chains and deliveries
Rising fuel prices are also creating wider pressure across supply chains and delivery networks in the country. Logistics operations are under strain, with transporters already raising freight charges, a move that is expected to increase the cost of delivered goods, including essential items. At the same time, higher operating costs are affecting delivery schedules, reducing overall efficiency in supply chains and last-mile distribution systems.In several regions, reports suggest that a large number of vehicles are being kept idle as operating costs and challenges continue to rise, leading to estimated losses of nearly Rs 3,500 per vehicle per day in some sectors. The ripple effect is already visible, with disruptions in vehicle movement, pressure on supply chains, delayed deliveries, and growing strain on manufacturing, import-export activity, and the movement of essential commodities.
Household bills go up
Rising petrol and diesel prices are set to squeeze household budgets, making everyday expenses, from food delivery and groceries to dining out, more expensive. As fuel costs climb, transport-linked expenses across essential goods are also rising, adding to the burden on consumers and pushing up overall living costs. The impact is expected to deepen further, with inflationary pressures building across the economy. Your daily consumption basket: including staples, packaged foods and other essentials could get costlier in the months ahead as higher fuel prices feed into supply chain and input costs. The latest fuel price revision, amid ongoing Middle East tensions, is also likely to pressure FMCG companies, which may be left with limited options such as selective price hikes or reductions in product grammage, according to industry executives. Freight costs are set to increase distribution and input costs, further straining margins of companies already grappling with 8-10% inflation.“If fuel prices remain elevated over multiple quarters, companies may eventually resort to calibrated price hikes or grammage reductions, which could weigh on consumption recovery, particularly in price-sensitive rural markets’’ Naveen Malpani, partner and consumer & retail industry leader, Grant Thornton Bharat had told TOI.FMCG companies like Nestle, Hindustan Unilever, Marico and Dabur have seen demand recovery but are facing rising input costs and inflation pressures. To offset this, they have already taken 2–5% price hikes and may consider further increases along with cost-cutting measures.
Impact on economy
Finance minister Nirmala Sitharaman on Monday assured that India’s economy continues to show resilience on a broader note. “We should appreciate that the challenges are more externally driven. We must also recognise that India’s domestic economic situation remains positive and resilient even today,” the FM said.
At the same time, rising fuel prices have raised concerns about creating wider economic pressure as transportation costs feed into supply chains. This is increasing the cost of essentials, including fruits and vegetables, and adding inflationary pressure across sectors. The movement of goods, manufacturing activity, and import-export operations are all experiencing stress due to higher logistics costs and delivery disruptions.
OMC shares soar
Fuel price revisions have also influenced market activity. Shares of major oil marketing companies moved higher on Monday, with Hindustan Petroleum Corporation Limited (HPCL), Indian Oil Corporation (IOC), and Bharat Petroleum Corporation Limited (BPCL) all soared in green.IOC shares rose 4% to Rs 145, HPCL surged 6% to Rs 412.55, and BPCL advanced over 4.5% to Rs 309 on the BSE. The movement came as crude oil prices touched a two-week low amid signs of progress in US-Iran peace talks.Meanwhile, before the recent price hike, the government had been stepping in to help oil marketing companies (OMCs) manage the pressure from rising crude prices by cutting excise duties. Now, the FM highlighted, any reduction in excise duty on petrol and diesel would result in a revenue impact of around Rs 1 lakh crore.
What’s ahead for OMCs?
Earlier, in the absence of price hikes, oil marketing companies (OMCs) were facing heavy losses of up to Rs 1,000 crore per day. Now, with fuel prices rising by nearly Rs 7 per litre, the question is whether these losses will be reduced or not.The recent series of back-to-back price increases is expected to provide some relief to OMCs, but it is unlikely to fully offset their burden. Even if the situation in West Asia stabilises, uncertainty around the Strait of Hormuz is expected to persist for some time, keeping crude prices elevated, likely above $90 per barrel.At the same time, a weakening rupee continues to add pressure on margins. “Combined with a weakening rupee, this continues to pressure OMC margins, and they could still face under-recoveries. Going forward, some calibrated price revisions may be required. The government will need to balance OMC financial health against the impact on consumers,” Sourav Mitra, Partner – Oil and Gas, Grant Thornton Bharat told TOI.
3 F’s in focus
Finance minister Nirmala Sitharaman has also urged the country to focus on the 3 Fs, of fuel, fertiliser and forex. Apart from elevated crude oil prices, fertiliser costs have also surged to “unimaginable” levels, the FM noted, adding that high gold prices are creating additional challenges on the external front. She emphasised the need to focus on the “three Fs,” fuel, fertiliser and forex, pointing out that Prime Minister Narendra Modi’s recent appeals have been made in this context.Taken together, the latest fuel price revisions are no longer just a heavier cost at the petrol pump, they are beginning to ripple through daily lives. From transporters recalibrating freight rates and supply chains under strain, to households quietly tightening monthly budgets, the impact is gradually seeping into everyday life. With global crude trends still uncertain and geopolitical tensions far from settled, the outlook for fuel prices remains vulnerable to developments beyond the country.
Stock market rallied sharply on Monday, with the Sensex soaring more than 1,000 points and the Nifty reclaiming the 24,000 mark, as easing geopolitical tensions in West Asia and falling crude oil prices boosted investor sentiment globally.The 30-share BSE Sensex jumped 1,073.61 points, or 1.42 per cent, to close at 76,488.96, while the NSE Nifty 50 surged 312.40 points, or 1.32 per cent, to settle at 24,031.70.The rally came after optimism grew around a possible agreement between the United States and Iran, following remarks by US President Donald Trump over the weekend that a deal was “largely negotiated”.
Nifty50 top gainers
| Company Name | Current Price (Rs) | Price Change | % Change |
|---|---|---|---|
| Eicher Motors | 7,414 | 433.00 ↑ | 6.20% ↑ |
| Adani Ent. | 2,850 | 132.00 ↑ | 4.88% ↑ |
| Bajaj Finance | 941.90 | 25.40 ↑ | 2.77% ↑ |
| Tata Motors PV | 373.25 | 9.90 ↑ | 2.73% ↑ |
| L&T | 4,033 | 107.00 ↑ | 2.72% ↑ |
| HDFC Bank | 786.85 | 20.10 ↑ | 2.62% ↑ |
| Eternal | 247.67 | 5.72 ↑ | 2.37% ↑ |
| Bajaj Finserv | 1,807 | 41.40 ↑ | 2.35% ↑ |
| Kotak Bank | 392.85 | 8.71 ↑ | 2.27% ↑ |
| Shriram Finance | 961.95 | 21.00 ↑ | 2.23% ↑ |
Sensex top gainers
| Company Name | Current Price (Rs) | Price Change | % Change |
|---|---|---|---|
| Bajaj Finance | 941.90 | 25.40 ↑ | 2.77% ↑ |
| L&T | 4,033 | 107.00 ↑ | 2.72% ↑ |
| HDFC Bank | 786.85 | 20.10 ↑ | 2.62% ↑ |
| Eternal | 247.67 | 5.72 ↑ | 2.37% ↑ |
| Bajaj Finserv | 1,807 | 41.40 ↑ | 2.35% ↑ |
| Kotak Bank | 392.85 | 8.71 ↑ | 2.27% ↑ |
| ICICI Bank | 1,292 | 27.50 ↑ | 2.18% ↑ |
| SBI | 969.60 | 20.40 ↑ | 2.15% ↑ |
| Axis Bank | 1,311 | 25.80 ↑ | 2.01% ↑ |
| Titan Company | 4,159 | 79.40 ↑ | 1.95% ↑ |
Nifty50 top losers
| Company Name | Current Price (Rs) | Price Change | % Change |
|---|---|---|---|
| Max Healthcare | 1,001 | -22.40 ↓ | -2.19% ↓ |
| ONGC | 284.95 | -5.06 ↓ | -1.75% ↓ |
| Hindalco | 1,100 | -9.61 ↓ | -0.87% ↓ |
| Nestle India | 1,414 | -9.50 ↓ | -0.67% ↓ |
| Bajaj Auto | 10,491 | -58.50 ↓ | -0.56% ↓ |
| Infosys | 1,169 | -6.00 ↓ | -0.52% ↓ |
| TCS | 2,308 | -9.11 ↓ | -0.40% ↓ |
| Tata Consumer | 1,187 | -4.60 ↓ | -0.39% ↓ |
| HUL | 2,197 | -7.10 ↓ | -0.33% ↓ |
| Sun Pharma | 1,841 | -4.00 ↓ | -0.22% ↓ |
Sensex top losers
| Company Name | Current Price (Rs) | Price Change | % Change |
|---|---|---|---|
| Infosys | 1,169 | -6.00 ↓ | -0.52% ↓ |
| TCS | 2,308 | -9.11 ↓ | -0.40% ↓ |
| HUL | 2,197 | -7.10 ↓ | -0.33% ↓ |
| Sun Pharma | 1,841 | -4.00 ↓ | -0.22% ↓ |
| Kwality Wall’s | 26.33 | -0.06 ↓ | -0.19% ↓ |
Oil prices tumble as Iran deal hopes rise
Investor confidence improved as markets increasingly priced in the possibility of a diplomatic breakthrough between Washington and Tehran, which could lead to the reopening of the Strait of Hormuz and ease global energy supply concerns.According to news agency ANI, market expert Ponmudi R said optimism surrounding a potential US-Iran agreement revived risk appetite across global markets.“Investor sentiment improved significantly after Donald Trump stated over the weekend that a deal was ‘largely negotiated’, encouraging markets to increasingly price in the possibility of a near-term diplomatic resolution,” he said.He added that markets would look for the “successful implementation of a lasting peace agreement and the credible reopening of the Strait of Hormuz”.Brent crude prices dropped sharply below the $100 per barrel mark and were trading around $98 per barrel, down more than 5 per cent during the session.The Indian rupee also recovered strongly, gaining 48 paise to trade at Rs 95.21 against the US dollar after recent weakness.
Banking stocks lead market rally
Financial stocks led the gains on Dalal Street. Bajaj Finance, Larsen & Toubro, HDFC Bank, Eternal, Bajaj Finserv and Kotak Mahindra Bank emerged among the top Sensex gainers.Sectorally, Nifty PSU Bank rose 2.73 per cent, while Nifty Private Bank advanced 2.02 per cent, as per ANI. Nifty Auto climbed 1.66 per cent and Realty gained 1.54 per cent.However, FMCG stocks remained under pressure. Infosys, Tata Consultancy Services, Sun Pharma and Hindustan Unilever were among the laggards.
Global markets gain amid improving sentiment
Asian markets also ended higher on Monday amid improving global risk appetite. Japan’s Nikkei 225 surged 2.76 per cent, while Taiwan’s weighted index jumped 3.15 per cent.European markets were trading in positive territory, while US markets had settled higher on Friday.Meanwhile, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,440.47 crore on Friday, according to exchange data.
Business
Gold price today: Yellow metal rises; check 24K, 22K city-wise rates in Delhi, Mumbai, Kolkata and more
Gold prices rose in futures trade on Monday, tracking gains in global markets amid growing optimism surrounding a possible peace agreement between the United States and Iran. Retail gold rates across major Indian cities also moved higher, with 22K, 24K and 18K prices recording gains compared to the previous day.On the Multi Commodity Exchange (MCX), gold contracts for June delivery climbed by Rs 426, or 0.27 per cent, to Rs 1,59,105 per 10 grams in a business turnover of 5,312 lots. As per PTI, analysts attributed the rise to a weaker US dollar and positive sentiment linked to the ongoing US-Iran negotiations.Gaurav Garg, research analyst at Lemonn Markets Desk, said easing crude oil prices and hopes of a peace deal supported bullion prices globally. In the international market, Comex gold futures for the June contract rose nearly 1 per cent to USD 4,590.62 per ounce in New York, as quoted by news agency PTI.Analysts also noted that hopes of easing tensions in West Asia have reduced fears of another inflationary spike driven by oil prices, supporting sentiment in precious metals markets.
City-wise gold rates today
Gold rate in Bengaluru today:Gold prices in Bengaluru have moved higher today. The 24K gold rate stands at Rs 15,938 per gram, while 22K gold is priced at Rs 14,610 and 18K at Rs 11,954 per gram, all up from yesterday’s levels.Gold rate in Delhi today:In Delhi, gold prices recorded gains across categories. The 24K gold rate is Rs 15,953 per gram, while 22K gold stands at Rs 14,625 and 18K at Rs 11,964 per gram.Gold rate in Mumbai today:Mumbai has also witnessed an increase in bullion prices. The 24K gold rate is Rs 15,938 per gram, while 22K and 18K gold are priced at Rs 14,610 and Rs 11,954 per gram, respectively.Gold rate in Chennai today:Gold prices in Chennai have risen sharply compared to other cities. The 24K gold rate stands at Rs 16,124 per gram, while 22K gold is at Rs 14,780 and 18K at Rs 12,400 per gram.Gold rate in Kolkata today:Kolkata has seen a rise in gold prices today. The 24K gold rate is Rs 15,938 per gram, while 22K gold is priced at Rs 14,610 and 18K at Rs 11,954 per gram.Gold rate in Hyderabad today:Gold prices in Hyderabad have edged higher. The 24K gold rate stands at Rs 15,938 per gram, while 22K and 18K gold are available at Rs 14,610 and Rs 11,954 per gram, respectively.Gold rate in Ahmedabad today:Ahmedabad has recorded gains in gold prices. The 24K gold rate is Rs 15,943 per gram, while 22K gold stands at Rs 14,615 and 18K at Rs 11,959 per gram.Gold rate in Jaipur today:In Jaipur, gold prices have moved up today. The 24K gold rate stands at Rs 15,953 per gram, while 22K and 18K gold are priced at Rs 14,625 and Rs 11,964 per gram, respectively.Gold rate in Bhubaneswar today:Gold prices in Bhubaneswar have increased from yesterday’s levels. The 24K gold rate is Rs 15,938 per gram, while 22K gold is at Rs 14,610 and 18K at Rs 11,954 per gram.Gold rate in Pune today:Pune has also witnessed higher bullion rates. The 24K gold rate stands at Rs 15,938 per gram, while 22K and 18K gold are priced at Rs 14,610 and Rs 11,954 per gram, respectively.Gold rate in Kanpur today:Gold prices in Kanpur have edged higher today. The 24K gold rate is Rs 15,953 per gram, while 22K gold stands at Rs 14,625 and 18K at Rs 11,964 per gram.
Bracket set, regionals begin May 29
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