THE wide-ranging tax proposals put forward by the Institute of Cost and Management Accountants of Pakistan seek to widen the country’s narrow tax base at a time when fiscal pressures leave no room for inaction. By targeting digital services, corporate promotion, windfall gains and carbon emissions, the proposals underscore that large segments of economic activity are either lightly taxed or entirely outside the formal system. Conceptually, the direction of the proposals is right. A digital services tax and a regulated framework for online gaming recognise the rapid shift of economic activity into virtual spaces, where tax authorities have struggled to keep pace. Similarly, windfall gains tax and financial transaction levies seek to increase collection from sectors benefiting disproportionately during market upswings. Climate-linked proposals, including carbon and landfill taxes, signal a long-overdue effort to integrate environmental costs into tax policy.

That said, the proposals raise questions about jurisdictional clarity and practical design. Certain proposed levies, particularly those related to municipal services, landfill disposal, building safety and urban transport, appear to fall outside the federal tax net and within provincial or even local government domains. Without clear coordination mechanisms, such proposals risk either duplication or non-implementation. There are also concerns about repetition. Steps such as additional taxation on second homes or property transactions echo past proposals that have delivered limited results. More importantly, the proposals do not recommend any meaningful reform for effectively taxing politically sensitive yet fiscally critical segments of the economy. Retail, wholesale trade, professional services, large parts of the real estate value chain and agriculture, long identified as major contributors to informality and tax leakage, remain largely unaddressed. Any serious effort to broaden the tax base must confront these sectors, rather than relying heavily on newer or more easily documented areas such as digital services and corporate activity.

Published in Dawn, March 23rd, 2026

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