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Taxing the people — a messy structure

Pakistan’s official tax discourse is mostly structured around a single question: how to collect more revenue. This narrow obsession with short-term revenue targets has produced a deeply distorted tax system that undermines growth, penalises documentation and increasingly shifts the burden onto those who are already visible, compliant and easy to tax. Instead of broadening the tax base through structural reform, successive governments have relied on incremental, often distortionary measures, such as higher rates, additional levies, withholding taxes, and temporary surcharges, to squeeze immediate revenue from the formal economy. Inevitably, the result is a regressive tax structure where compliant firms, salaried individuals and documented businesses shoulder a disproportionate burden while politically protected and informal sectors, including agriculture, retail, real estate and large parts of the services sector, remain lightly taxed despite their substantial contribution to GDP. Th...
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Budget may include income tax relief amid salary, pension freeze

ISLAMABAD: The government is considering reducing the income tax burden on salaried individuals while refraining from increasing salaries and pensions in the upcoming budget, aiming to provide equitable fiscal relief to both public and private sector employees. Informed sources told Dawn that Finance Minister Muhammad Aurangzeb has expressed a desire to lower tax rates and, if possible, raise the taxable income threshold for the salaried class in recognition of their significant contribution to revenue generation compared to retailers, wholesalers, exporters, and real estate players. On the other hand, the government may keep salaries and pensions uncha­nged at current levels, using the resulting fiscal savings to provide tax relief instead. “There is no reason to increase salaries if it pushes employees into hig­her taxable income brackets, leaving government employees with little to no increase in take-home pay,” an official said. He added that with lower tax rates and higher taxa...
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Analysis: No war, but no peace either

• Pakistan-India ties still trapped by Delhi’s intransigence, US failure to create political process after ceasefire • Islamabad’s institutional coherence shattered New Delhi’s illusions it was dealing with ‘weak neighbour’ • Water war takes centre stage as Indus treaty remains ‘unilaterally held in abeyance’ THE fighting lasted barely 90 hours, but the political consequences have proved far more durable. While neither India nor Pakistan got what they expected from the flare-up of 2025, very few could have predicted that less than a year later, it would be Pakistan that emerged as the diplomatic lynchpin in the region, while India remained relegated to the side-lines. Today, the relationship between the two neighbours remains frozen in an unusually rigid state; there is no war, but there is no diplomacy worth the name, either. The border is shut, trade is suspended and the Indus Waters Treaty remains unilaterally held in abeyance by New Delhi. Military hotlines between the two co...
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Finmin says economic recovery remains intact amid regional conflict, assures uninterrupted fuel supply

Minister for Finance and Revenue Senator Muhammad Aurangzeb on Saturday said Pakistan’s economy continued to show signs of recovery despite ongoing regional tensions , citing strong growth in large-scale manufacturing, exports, remittances and foreign investment inflows. Addressing a news conference alongside Minister for Petroleum Ali Pervaiz Malik, the finance minister said the country’s large-scale manufacturing (LSM) sector recorded 11 per cent year-on-year growth in April, while cumulative growth during the first nine months of the current fiscal year stood at 6.5pc. He said the government expected the GDP growth rate to remain close to 4pc during the current fiscal year, compared to 3.1pc last year. Exports have grown by 9pc month-on-month and 14pc year-on-year, driven by value-added textiles, IT and other sectors, he said, adding that the export growth was broad-based. Highlighting overseas inflows, Aurangzeb said remittances reached $3.5 billion in April after touching $3.8...
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Pakistan expands US lobbying push with focus on defence, critical minerals and policy influence

WASHINGTON: Pakistan has significantly expanded its lobbying and strategic communications footprint in the United States, signing a new $1.2 million contract with a Washington-based advisory firm as it seeks deeper engagement on defence cooperation, critical minerals and broader economic diplomacy in an increasingly competitive policy environment. According to filings submitted under the US Foreign Agents Registration Act (FARA), Ervin Graves Strategy Group LLC registered on May 1 as an official foreign agent of Pakistan’s embassy in Washington under a two-year contract valued at $1.2m, requiring payments of $50,000 per month for its services. FARA requires the public listing of all lobbyists or lobbying firms working for a foreign entity, including governments and private corporations. The agreement tasks the firm with a wide-ranging mandate that includes lobbying US policymakers, government-relations work, legislative monitoring, stakeholder engagement, media messaging, think t...
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Security forces kill five terrorists in Tank, DI Khan in IBOs: ISPR

Security forces killed five terrorists in two separate engagements in Khyber Pakhtunkhwa’s Tank and Dera Ismail Khan districts, said the Inter-Services Public Relations (ISPR) on Friday. In Tank district, an intelligence-based operation was conducted on the reported presence of khwarij. “During conduct of the operation, own troops effectively engaged khwarij location and after intense exchange of fire, four khwarij, belonging to Indian-sponsored Fitna-al-Khwarij were sent to hell,” said the military media wing. Fitna al Khawarij is a term the state uses for terrorists belonging to the banned Tehreek-i-Taliban Pakistan. In another IBO conducted in DI Khan district, a terrorist was killed during a firefight with security forces. The ISPR said the IBOs were conducted on May 7-8. “Weapons and ammunition have also been recovered from killed Indian sponsored khwarij, who remained actively involved in numerous terrorist activities in the area.” A sanitisation operation is being conduc...
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Quadcopter attack in KP's Bannu injures 8, including women

BANNU: A powerful explosion, following the reported crash of a quadcopter drone, injured eight people, including women, in Khyber Pakhtunkhwa’s Bannu district on Friday night. Security agencies immediately launched an investigation into the matter as panic spread in the area. According to police, the drone flew into the area from an unknown location and exploded shortly after falling near a residential area, leaving several people injured. Local residents rushed to the scene and shifted the injured to the District Headquarters Hospital Bannu after initially providing first aid. The administration at the District Headquarters Hospital confirmed that all injured individuals are receiving medical treatment, while some are said to be in critical condition. Meanwhile, security sources said the incident is being investigated from multiple angles to determine the nature of the explosion, the origin of the drone, and possible motives. Local residents expressed deep concern over the incid...
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