The discussions in Media on Tax generation often assume that Pakistan has shown little improvement in collection, or that tax administration was better in the past, particularly during 1960s & 1980s. This, however, is not the case. During the current decade, Pakistan has achieved the highest increase in tax revenue in its history, both in Pak Rupees and US Dollars, with the (projected) absolute change in collections being an increase on US$ 15,410 million in FY2020* compared to FY2011.
This exceptional year-on-year increase, especially since 2010, was made possible, arguably by the passage of the 18th amendment and the 7th NFC Award, which delegated tax collection to the Provinces and resulted in the creation of Provincial Revenue Authorities. A comparative analysis of FBR Yearbooks shows that from 2011 to 2020* collections have been increasing by PKR 277.4 billion annually, in comparison to about PKR 98 billion per year during the previous decade.
It is notable that the biggest ever growth in taxes within a decade occurred in the 1970s. This decade started with political turmoil and loss of East Pakistan (a huge source of revenue). The Bhutto regime, along with making a constitution, also reformed the old Central Board of Revenue (CBR) into the Federal Board of Revenue (FBR), which proved to me more effective and brought in an increase of 551% in Net Tax (in Rupees) when it increased from Rs. 4.610 billion (in 1970) to Rs. 30.016 billion (in 1980).
After this decade, the percentage growth slowed down by more than half, and hovers around 220-280% each following decade. One reason attributed for this is that Pakistan was no longer as desperate as it was in the early 1970s, when it was an international pariah and with no more aid coming in it had to raise more revenue locally. The decades before and after saw Western monetary aid, which may have disincentivised efficient tax collection, net expansion and reforms, until aid declined resulting in government borrowing from IMF and pursuing restructuring to raise revenue for repayments.
Lastly, however, the growth in tax revenues during the current decade has also been accompanied with mushrooming government and its expenses. Perhaps, the quickest way to reduce Current Account Deficits, while tax revenue increases incrementally, is to reduce dead-weight and inconsequential offices within the government.