Pakistan's Tax System: Only 7.5 Million of 12 Million Filers File Returns Continuously

ISLAMABAD — I read the document three times, and three times I stopped at the same place. The Federal Board of Revenue (FBR) figure showing that nearly 12 million people in Pakistan have filed for one-time transactions — property or vehicle purchases — while only about 7.5 million file returns continuously. That gap is not a statistical quirk. It is the spine of the entire system, and it is where the real story begins.

Let me be clear first: this is not a cricket story. There is no match, no player, no selection controversy, no pitch report in the supplied material. This is a report on Pakistan's tax administration, and I read it not because there is a hidden cricket match, but because a system's selection mechanism — whether it picks batters or taxpayers — breaks in much the same way. A district coach watches 500 children in a session and picks 15; the IRIS system watches millions of people every year and then treats only a fraction as "active." In cricket, the discarded child comes back next season. In tax, the person does not return until next year — and by then the account has become a "stop-filer."

My own habit is that I do not trust any claim until I can line it up with a timestamp or a series. Here the number is 1.2 crore, along with 7.5 million, and in between a third group that is mentioned but not placed clearly in the foreground — those making incidental or one-off transactions. Put the trio together and you see that the FBR database is calling two different things by the same name. One is a person who, once in a lifetime, registered himself to get a property deed done. The other is a person who earns income and has carried the responsibility of filing an annual return. On the spreadsheet, both are "filers." In practice, neither is.

This confusion creates the expectation I call "database inflation." The administration estimates it has a tax base when in reality a large number of people for whom tax was a one-time episode, not an annual duty, sit there. It reminds me of the famous franchise auction where a buyer spent a huge sum on a player who was never actually used. The name is on the board, not on the scoreboard.

And here is a paradox that does not show up on the surface. The common assumption is that if people are not filing, they must have dropped off the database. But the information states that non-compliance is discovered only when the person reopens the IRIS account — that is, the next time he files for a property or vehicle matter. That is an administrative trap in itself. A man who has no recurring transactions has no pressure to open the account. The FBR sends him a notice, and that email lands at an address he last checked in June. No response comes, so the notice goes again; no one listens, so the same failure is recorded in the next cycle. In my cricket training I saw this same problem: certificate-based selection. Paperwork that does not reach the right person.

The direction of reform is the same as in any development system — you do not shrink the plan, you categorise it. Restrictions on economic transactions were introduced under the Finance Act 2026, and as the information clearly states, sources have demanded that the filing requirement be removed entirely for those with no income. That is a direction I think should be taken seriously, but one historical example must be kept in mind that has recurred in Pakistan's economy: soft policy is not implemented to the end. Restrictions are written down, but it is not clear whether they are fully operational, whether they will be challenged in court, or whether they will be enforced uniformly. "Political economy" matters here the way selection committees matter in cricket: the rules are on paper, the obstruction is in real pressures.

I will not read this report the way many will — "1.2 crore filers, only 7.5 million active" — and then sit back and say the system has failed. I find that claim unreliable. In fact, the figure alone does not prove any offence. It is possible that a very large number of the 12 million did not engage in any non-compliant transaction. The biggest mistake in tax reporting is that we put "registration" and "compliance" into the same camp — treating a player's registration as his activity, when he may have been out for years. I just want to say that a big database is not a victory. The real metric is the number of active, regularly filing taxpayers, not historical registrants.

The most interesting thing in this story, to me, is not what is in it but what is probably mentioned but not analysed — the condition of non-taxpayers who have no regular income but must once in their lives deal with a will, a vehicle or a house. For them, this restriction can become an administrative penalty. That is the risk I find biggest.

One lesson from financial markets that I keep repeating: a measure that turns ease into just another technical form loses its purpose. I hope that in the coming months the FBR will show two different things: on one hand, that it has split the data into clean categories; on the other, that it has built an information system that reaches even inactive users. If neither happens, the same old problem will remain — reform on paper, the same inflation in the database. And until that happens, the count will remain little more than statistical decoration.