Introduction
Financing the governance setup is probably the most critical function that a nation-state confronts. Amongst the various instruments at a government's disposal for financing its operations, collecting taxes is considered the most important one. This is why we normally witness large tax-related establishments around the world. Pakistan is no exception to this, with the Federal Board of Revenue (FBR) being the apex federal body for the collection of taxes. At the provincial level, provinces have their tax collecting
agencies.
Despite such vast, expansive setups, revenues from taxation have traditionally lagged behind expenses of the state (both at the federal and the provincial levels). At the turn of the century, the gap between the total expense and total revenue of the federal government stood at approximately Rs. 500 billion. Now, as per the Federal Budget 2024-25, the expected gap between expenses and earnings will be an estimated (negative) Rs. 8 trillion or more. The scale difficulties facing the federal government are amply reflected in the following table.
