By Farooq Awan

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called for expanding Pakistan’s tax net in the federal budget FY2026-27, saying that bringing more individuals and businesses into the documented economy can reduce pressure on compliant taxpayers and improve the sustainability of the tax system.

According to the FPCCI budget proposals document available with Wealth Pakistan, the business body stated that the existing tax structure places a significant burden on taxpayers already operating within the formal system, while a large portion of economic activity remains outside the documented framework.

The chamber maintained that the growing burden on compliant taxpayers has become increasingly difficult for many businesses and individuals over time.

According to the proposals, a relatively narrow tax base creates additional pressure on those already paying taxes and limits the effectiveness of revenue collection efforts.

FPCCI emphasized that broadening the tax base rather than repeatedly increasing the burden on existing taxpayers could support a more balanced and sustainable approach to revenue generation.

The organization noted that bringing more economic activity into the documented system can create opportunities to distribute tax responsibilities more evenly across different sectors of the economy.

According to the document, strengthening documentation remains important for improving transparency and creating a more efficient taxation environment.

FPCCI stated that expanding the tax base can also help improve competitiveness by creating a level playing field for businesses operating within the formal economy.

The chamber maintained that documented businesses often face higher compliance costs and tax obligations while competing against entities operating outside the tax net.

According to the proposals, a broader tax base can reduce such disparities and support healthier business competition.

The organization further noted that improving documentation and increasing the number of taxpayers can strengthen long-term revenue collection without relying heavily on higher tax rates.

FPCCI maintained that increasing tax rates alone may not always produce the desired results if large segments of economic activity remain undocumented.

The chamber stated that encouraging participation in the formal economy through facilitation measures and simpler procedures can improve voluntary compliance.

According to the document, digitalization and simplified tax mechanisms can also play an important role in expanding the tax net and reducing procedural barriers.

FPCCI emphasized that wider participation in the documented economy can contribute to stronger financial transparency and more effective economic planning.

The organization noted that a broader tax base can also support policy stability by creating more predictable revenue streams and reducing dependence on a limited pool of taxpayers.

According to the proposals, improving documentation and reducing pressure on existing taxpayers remain important for creating a more balanced tax system and supporting long-term economic growth.

Credit: INP-WealthPk