Shahid Khaqan Abbasi, a former prime minister of Pakistan, has publicly criticized the country’s latest tax policy reforms, calling them insufficient to address systemic fiscal challenges. The remarks, made during a press conference in Islamabad on June 12, 2026, come amid growing concerns over the government’s ability to stabilize the economy amid a deepening liquidity crisis. Abbasi, who served as prime minister from 2017 to 2018, argued that the reforms fail to target tax evasion and corruption, which he described as “the twin pillars of Pakistan’s fiscal malaise.”
How Pakistan’s Tax Reforms Have Shifted Over the Past Decade
Pakistan’s tax policy has undergone significant changes since the early 2010s, with periodic adjustments aimed at broadening the tax base and increasing revenue collection. According to a 2023 report by the Pakistan Institute of Development Economics (PIDE), the tax-to-GDP ratio remained stagnant at around 11% between 2015 and 2022, far below the South Asian average of 16%. Abbasi’s criticism aligns with long-standing arguments from economists that the government has prioritized short-term revenue gains over structural reforms.
“The current approach resembles a patchwork of temporary measures rather than a coherent strategy,” said Dr. Ayesha Khan, an economist at PIDE.
“Without addressing tax evasion and improving compliance, any policy will struggle to deliver sustainable results.”
The former prime minister specifically targeted the government’s reliance on excise duties and import taxes, which he claimed disproportionately burden low-income households while leaving high-net-worth individuals and corporations largely unscathed.
The Role of International Financial Institutions in Shaping Tax Policy
International bodies such as the International Monetary Fund (IMF) and the World Bank have long advised Pakistan to modernize its tax system. A 2024 IMF staff report highlighted that “Pakistan’s tax administration remains underdeveloped, with limited digital infrastructure and weak enforcement mechanisms.” These findings echo Abbasi’s concerns, as he pointed to the lack of a unified digital tax platform as a major obstacle to reform.
The government’s 2026 budget, which faces scrutiny from both domestic and international stakeholders, includes a push for digital tax registration. However, critics argue that the rollout has been slow. “Only 35% of small and medium enterprises (SMEs) are currently registered for tax purposes,” said Imran Ahmed, a senior analyst at the Islamabad Policy Research Institute.
“Without a robust digital framework, compliance will remain elusive.”
This gap underscores the challenge of implementing reforms in a country where informal economic activity accounts for nearly 40% of GDP, according to the World Bank.
What’s at Stake for Pakistan’s Fiscal Future
Abbasi’s remarks are particularly significant given Pakistan’s current economic trajectory. The country is grappling with a foreign exchange crisis, a widening budget deficit, and a debt-to-GDP ratio that reached 82% in 2025, according to the State Bank of Pakistan. The government’s reliance on short-term borrowing to fund subsidies has exacerbated these issues, creating a cycle of fiscal instability.
“The tax policy must be part of a broader strategy to attract foreign investment and reduce dependency on debt,” said Dr. Naveed Malik, a former finance ministry official.
“Otherwise, the risk of a full-blown crisis remains high.”
Abbasi’s call for “targeted reforms” resonates with a segment of the business community, which has long criticized the government for favoring populist measures over structural adjustments.
Comparing Reforms: A Tale of Two Approaches
Comparing the current tax reforms to those implemented during the 2018–2022 period reveals both continuity and change. Under former Prime Minister Imran Khan, the government introduced a digital tax registration system and expanded the tax net to include previously untaxed sectors. However, these efforts were undermined by a lack of enforcement and political resistance from powerful interest groups.
In contrast, the 2026 reforms emphasize simplifying tax procedures and reducing bureaucratic hurdles. While this may improve compliance, it does little to address the root causes of tax evasion. “Simplification is necessary but not sufficient,” said Samina Mehmood, a tax law professor at Lahore University.
“Without stronger penalties and better oversight, the system will continue to be exploited.”
The discrepancy between policy aspirations and implementation highlights the challenges of governance in Pakistan’s complex political landscape.
The debate over tax policy in Pakistan is more than a technical discussion—it is a reflection of the country’s broader struggles with governance, equity, and economic sustainability. As Abbasi’s criticism gains traction, the pressure on the government to deliver tangible reforms will only intensify. For now, the question remains: Will these reforms be enough to avert a deeper fiscal crisis, or will they merely delay the inevitable? Pakistan Institute of Development Economics analysts suggest that the coming months will be critical in determining the path forward.
