Facing challenges in implementing fresh tax measures, the government is now emphasizing 'equity' over 'broadening the tax base' to justify higher taxes on lower-income groups. The aim is to achieve a record revenue target of nearly Rs14 trillion for FY26, a 22% increase from the previous fiscal year.

Under the International Monetary Fund (IMF) programme, the government plans to collect Rs12.845 trillion autonomously, based on a 4.2% GDP growth and 7.5% inflation rate.

To meet the ambitious target, the government aims to introduce new tax measures worth Rs655 billion and enforce tax compliance to generate an additional Rs400 billion. These figures will be finalized in a cabinet meeting ahead of the Finance Minister's budget speech.

The Federal Board of Revenue (FBR) faces challenges in meeting tax collection targets due to ineffective enforcement of existing tax laws. Despite concerns, no significant measures have been taken to improve enforcement. The government remains optimistic about revenue projections, but economic challenges persist.

The government aims for a tax-to-GDP ratio of 12.3% in FY26, with the FBR contributing 10.6% of GDP. However, achieving this target may be difficult due to lower allocations for development projects and financial constraints.

The government is transitioning from broadening the tax base to focusing on equity, with lower tax rates being increased across various sectors. The aim is to generate more revenue through withholding taxes, levies on financial transactions, and taxes at the Thresher Unit Level.

A new concept of taxing digital transactions at lower rates and cash transactions at higher rates will replace the filer and non-filer distinction. However, the impact of these tax hikes on revenue collection and economic activity remains uncertain.

While tax measures may concern consumers and businesses, relief is expected for the salaried class earning around Rs100,000 per month. The government aims to stimulate domestic manufacturing while facing fiscal challenges due to reduced import duties.

The government is considering extending tax measures to former Fata and Pata members, despite opposition from some provinces. Former FBR officials emphasize the need for enforcement reforms to effectively expand the tax base and address systemic revenue challenges.