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A Suzuki Cultus once cost ≈ PKR 550,000
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Today, it costs PKR 4–4.5 million
Tax receipts rose because prices exploded, not because productive capacity multiplied. The same logic applies across consumption taxes, import duties, and income brackets distorted by inflation and currency depreciation.
Observation: Higher nominal taxes do not fix balance sheets when the cost of the state compounds faster.
Where the Money Actually Goes: The Expenditure Reality
This is where the debate usually ends — because the numbers are hard to defend.
Major Federal Expenditures (FY25–26)
| Category | Allocation (PKR) |
|---|---|
| Debt Servicing (Total) | ≈ 74.1% of federal net revenues |
| Defense | 2.55 trillion |
| Pensions | 1.055 trillion |
| Subsidies | 1.186 trillion |
| Grants & Transfers | 1.778 trillion |
| Development (PSDP) | 2.869 trillion |
| Total Current Expenditure | 16.286 trillion |
Critical detail:
Domestic debt interest alone accounts for ≈ 87.7% of total interest outlays.
This is a classic debt-servicing spiral:
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Borrow more → pay higher interest
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Pay higher interest → collect more taxes
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Collect more taxes → still borrow more
At this point, taxation is no longer developmental. It is maintenance spending.
