Govt struggles to expand tax base as illicit trade surges

The government of Pakistan is facing significant challenges in widening its tax base while simultaneously combating the rise of smuggling and illicit trade, both of which could generate crucial revenue for the national economy. Efforts to bring more traders into the tax net have shown limited success, highlighting the complexity of the issue. Earlier this year, the Federal Board of Revenue (FBR) launched the Tajir Dost Scheme (TDS) to integrate more traders into the formal tax system. The initiative, which began on April 1st, targets 3.2 million traders across 42 cities, including major urban centres such as Karachi, Lahore, and Islamabad. However, since its inception, only 64,000 retailers have registered, underscoring the difficulties the government faces in achieving compliance among traders.