Should the government borrow at any cost to protect its people or tax heavily those not in the tax net? Economists believe that a higher budget deficit means more taxes in the future to pay off government borrowing.

After all, the government pays back debt out of its revenue. In Pakistan, debt and taxes are increasing simultaneously, and their burden is becoming unsustainable. We are borrowing to repay our debt, while the social sector remains on the backseat. Perhaps, we need an innovative financing methodology to come out of this debt-tax trap.

Pakistan’s Human Development Index (HDI) is 0.54, indicating a low human development category. The country’s development deficit is growing daily, with people expecting access to education, healthcare, and clean drinking water. However, after paying interest on debt and subsidies, the federal government has limited funds to address social deficits.

This year’s budget (2024-25) sets a tax and non-tax revenue collection target of Rs17.8 trillion, a 46 per cent increase from last year. However, after paying Rs7.44 trillion to provinces, only enough is left to cover interest payments worth Rs9.76 trillion. Subsidies are another big-ticket item in the budget. The total amount earmarked for subsidies in the budget 2024-25 is Rs1.36 trillion.

Now, let’s examine the current expenditure on health,........

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