Khurram Schehzad, Advisor to the Finance Minister of Pakistan, has challenged the view that provincial governments are performing better than the federal government in tax collection.
Citing data from FBR, he said provincial revenues remain far below their true potential despite having large constitutionally assigned tax bases.
In a post shared on X on Friday, Schehzad said claims about stronger provincial tax performance do not match the facts.
According to FBR data for fiscal year 2025, the federal government collected more than Rs. 13 trillion in taxes and levies, equal to 11.3 percent of GDP. He added that federal collections are expected to rise to around 15 percent of GDP by June 2028.
In comparison, total tax collection by all provinces stood at only Rs. 979 billion, or 0.85 percent of GDP. Schehzad noted that in similar federal systems, provinces are expected to contribute around 3 percent of GDP, showing a large gap in Pakistan’s case.
He stressed that the debate on resource sharing should be based on results, not assumptions.
He pointed out that the services sector, which is taxed by provinces, has a taxable base of Rs. 29 trillion but generated only Rs. 650 billion, a very low yield. Agricultural income tax and property-related taxes also showed extremely weak collection.
Schehzad said provincial revenues would need to more than triple by 2028 to reach expected levels.
He emphasized that better tax efforts at both federal and provincial levels are necessary to improve public services, reduce fiscal pressure, and ensure a fair and balanced economic system across the country.