Pakistan is once again at a critical juncture in its economic journey, facing persistent fiscal imbalances, mounting debt, and widening income disparities. To address these challenges, the government is negotiating with the International Monetary Fund for another bailout package. As part of the conditions attached to financial assistance, the IMF has proposed a major tax reform aimed at the agricultural sector, a sector long shielded from serious taxation despite its significant role in the national economy. The suggested reform includes imposing a standard income tax rate of up to 45 percent on agricultural earnings, a move that has sparked debate across political, economic, and social circles.
Pakistan’s Economic Dependence on the IMF
Since independence, Pakistan has relied on external financing to balance its books. Among these sources, the IMF has been central in providing emergency loans and stabilization packages whenever the country has faced balance-of-payments crises. While IMF programs offer short-term breathing space, they come with stringent structural reforms designed to improve long-term fiscal discipline.
Tax reforms are a recurring feature of these agreements, given Pakistan’s chronically low tax-to-GDP ratio. The IMF argues that without broadening the tax base, including untaxed sectors like agriculture, Pakistan cannot achieve sustainable economic growth or fiscal independence.
Historical Exemptions for Agriculture
Agriculture contributes roughly 24 percent of Pakistan’s GDP and employs nearly 40 percent of the workforce. Yet its tax contribution is negligible, estimated at only 0.1 percent of total revenue. Historically, agricultural income has been exempt from federal taxation under constitutional provisions, leaving provinces with the authority to collect taxes on this sector.
However, provincial governments have been reluctant to tax influential landowning classes that dominate the political landscape. Over decades, this political economy has entrenched agriculture’s exemption, even as other sectors have borne rising tax burdens.
IMF’s Structural Benchmarks and Conditions
The IMF’s current proposal to tax agricultural income at a rate up to 45 percent is part of the structural benchmarks tied to the upcoming bailout program. These benchmarks are not merely suggestions but conditions that must be met for the release of funds. Under the agreement framework, provinces are required to align their agricultural income tax regimes with federal income tax rates by October 2024.
Additionally, exemptions for the livestock sector are to be removed by the same deadline. The IMF sees this as a way to create parity between salaried individuals, non-salaried businesses, and agricultural earners, ensuring fairness in the tax system.
The Rationale for Taxing Agriculture
The IMF and other financial institutions argue that taxation of agriculture is long overdue. The sector’s share of GDP suggests it should be a major contributor to public finances, but its actual contribution is negligible. By bringing agriculture into the formal tax net, the government could generate significant additional revenues.
The World Bank estimates that Pakistan could raise nearly 1 percent of GDP, or approximately Rs. 1.22 trillion annually, through effective taxation of agricultural income. Such an amount would make a substantial difference in narrowing fiscal deficits, funding development projects, and stabilizing public finances.
Comparing Agricultural and Non-Agricultural Tax Rates
Before the 2024 federal budget, salaried individuals earning more than Rs. 500,000 per month were taxed at 35 percent. After the budget, the threshold was lowered, with Rs. 341,000 per month taxed at 35 percent and Rs. 833,000 per month taxed at 39 percent.
Non-salaried individuals face an effective tax rate of 45 percent, which can rise to 50 percent with surcharges. The IMF’s recommendation is for provinces to adopt these same rates for agricultural income, effectively eliminating the disparity between income sources. The uniformity is intended to prevent individuals from disguising non-agricultural earnings as farm income to escape higher taxes.
Legal and Constitutional Constraints
One of the key challenges in implementing this reform is the constitutional arrangement that reserves the taxation of agriculture for the provinces. The federal government has no legal authority to impose direct taxes on agricultural income.
Recognizing this, the IMF has avoided recommending changes to the constitution and instead pushed for provincial governments to voluntarily harmonize their tax regimes with federal standards. This approach respects constitutional boundaries while still ensuring that agriculture is not treated differently from other income sources.
Political Economy of Agricultural Taxation
Taxing agriculture is not just an economic issue but a deeply political one. Large landowners wield significant influence in Pakistan’s politics, often forming the backbone of provincial and federal legislatures. Any attempt to impose higher taxes on agriculture directly threatens their financial interests.
Historically, this has led to strong resistance against reforms, with successive governments either diluting or abandoning agricultural tax initiatives. The IMF’s current proposal forces provincial governments to confront this longstanding imbalance, but political resistance remains a major obstacle.
Provincial Reactions to the IMF Proposal
Reactions from provincial governments have varied. Most provinces have indicated willingness to comply with IMF requirements, recognizing the fiscal necessity of broadening the tax base. However, Sindh has raised objections, arguing that the proposed increase from its current maximum agricultural income tax rate of 15 percent to between 35 and 45 percent is too steep and unrealistic.
Punjab, which has a variable rate system based on annual income, has shown more flexibility but still faces pushback from powerful agricultural lobbies. Khyber-Pakhtunkhwa has maintained exemptions for small landowners, such as those owning less than one acre, raising questions about equity in implementation.
Corporate Farming and Taxation
The IMF’s proposal does not stop at individual farmers but extends to corporate farming. Under the plan, corporate farms would fall under the corporate income tax regime, subject to the same rates as other corporate entities.
This marks a significant shift, as corporate farming has often been treated leniently under previous frameworks. By including corporate farms, the government aims to close another loophole that has allowed large-scale agricultural enterprises to escape meaningful taxation.
The Livestock Sector and Exemptions
The livestock sector, which forms a major component of Pakistan’s agricultural economy, has traditionally enjoyed broad tax exemptions. The IMF has specifically called for the removal of these exemptions by October 2024.
This is expected to face strong resistance, as livestock rearing is not only a commercial activity but also a livelihood for millions of small-scale farmers. Nonetheless, the IMF argues that maintaining such exemptions perpetuates inequality and undermines revenue collection.
Revenue Potential and Economic Impact
If implemented effectively, the IMF’s proposal could transform Pakistan’s fiscal landscape. The World Bank’s estimate of Rs. 1.22 trillion in potential revenue represents a massive increase compared to current collections from the sector.
Such resources could be channeled into critical areas such as infrastructure, health, and education, reducing reliance on debt financing. On the other hand, critics argue that imposing high tax rates could discourage investment in agriculture, reduce farm incomes, and exacerbate rural poverty. The challenge lies in balancing revenue generation with protection for small farmers.
International Comparisons
Pakistan is not unique in facing the dilemma of taxing agriculture. Many developing countries struggle with similar issues, balancing the need for fiscal revenue with the political clout of rural elites. In India, for example, agricultural income is exempt from federal taxation but taxed at the state level, similar to Pakistan’s system.
However, enforcement remains weak due to political sensitivities. In contrast, countries like Brazil and Turkey have successfully integrated agricultural income into broader tax systems, ensuring greater parity across sectors. Learning from these experiences could help Pakistan design a more effective and equitable framework.
Resistance to Fertilizer and Pesticide Taxation
Alongside the income tax proposal, the IMF also demanded an 18 percent sales tax on agricultural inputs such as fertilizers and pesticides. However, the federal government successfully resisted this demand, citing concerns about increased costs for farmers and potential food security risks.
By blocking this measure, the government signaled its commitment to protecting farmers from additional burdens, even while agreeing to broader structural reforms. The episode illustrates the delicate balance policymakers must strike between fiscal requirements and social stability.
Broader Structural Challenges in Agriculture
Taxation reforms alone cannot address the underlying issues plaguing Pakistan’s agricultural sector. Productivity remains low due to outdated practices, insufficient investment, and inadequate infrastructure.
Farmers face challenges ranging from water shortages and soil degradation to limited access to markets and credit. Without comprehensive reforms in these areas, taxation may be seen as punitive rather than developmental. The IMF’s focus on revenue generation, while important, must be complemented by domestic policies that strengthen agricultural productivity and sustainability.
Role of Provinces in Taxation
The 1973 Constitution assigns the responsibility of taxing agricultural income to provincial governments. This legal structure was designed to recognize the federal nature of Pakistan’s system and the regional significance of agriculture. However, the outcome has been uneven, as each province has developed its own tax laws and enforcement mechanisms.
While the federal government cannot directly intervene, it can encourage provinces to harmonize their frameworks. The IMF’s demand that provinces adopt federal income tax rates by October 2024 underscores this dynamic, making provincial politics central to the reform process.
Sindh’s Objections and Political Realities
Among the provinces, Sindh has been the most vocal in expressing reservations about the IMF’s proposal. Currently, the province levies a maximum rate of 15 percent on agricultural income. Raising this to 35–45 percent would represent more than a doubling of the tax burden, which the provincial leadership considers politically unsustainable.
Sindh argues that its agricultural economy is already under stress due to recurrent floods, declining yields, and inadequate infrastructure. The fear is that such a steep increase could worsen rural poverty and fuel political unrest. Given that influential landowners hold considerable sway in Sindh’s provincial assembly, pushing through reforms without modifications may prove extremely difficult.
Punjab’s Variable Rate Framework
Punjab, the country’s most populous province and the largest contributor to agricultural output, follows a variable rate system based on annual agricultural income. Its rates have historically been more flexible, offering lower taxation to smaller farmers while applying higher rates to larger landholdings. This system reflects Punjab’s attempt to address both equity and revenue needs.
However, aligning fully with federal standards would still require significant upward revisions in tax rates. Punjab’s leadership faces the challenge of navigating farmer resistance while ensuring compliance with IMF benchmarks. Its willingness to negotiate with the IMF indicates some openness to reform, but internal resistance from politically influential farming lobbies remains a considerable barrier.
Khyber-Pakhtunkhwa and Exemptions for Small Landholders
Khyber-Pakhtunkhwa has taken a more populist approach by exempting up to one acre of land from agricultural income taxation. This measure is intended to protect small farmers, who form the majority in the province’s agrarian economy.
While the exemption has been popular politically, it creates disparities in the broader tax system, particularly when large landowners can fragment holdings or exploit loopholes to minimize liability. The IMF’s push for harmonization directly challenges such provincial exemptions, raising questions about whether local governments can maintain populist protections while still meeting international commitments.
Balochistan’s Limited Revenue Capacity
Balochistan, though geographically the largest province, has the least developed tax system due to its low population density and weaker administrative structures. Agricultural taxation in Balochistan has historically been minimal, both in terms of collection capacity and political will. Large landowners dominate the provincial economy and resist reforms that would directly affect their financial interests.
With limited institutional capacity to enforce a robust tax regime, Balochistan faces a unique challenge: even if laws are amended, actual implementation may remain weak, undermining the broader goal of tax parity across provinces.
Farmers’ Concerns and Resistance
Beyond provincial governments, the farming community itself is deeply concerned about the proposed taxation. Farmers argue that their incomes are highly variable, dependent on seasonal yields, weather conditions, and market fluctuations. Unlike salaried employees with stable monthly incomes, farmers face uncertainty and risks that make high fixed tax rates particularly burdensome.
Smaller farmers fear that increased taxation could push them deeper into debt or force them to abandon agriculture altogether. These concerns are amplified by existing structural problems such as rising input costs, lack of access to credit, and fluctuating crop prices.
Corporate Farming and Income Tax
Corporate farming has grown in prominence over the past two decades, attracting investment from both domestic and international firms. These enterprises typically operate at larger scales, often using modern machinery, irrigation systems, and labor management practices.
The IMF’s proposal extends taxation to corporate farming by subjecting these entities to corporate income tax rates. While this move is intended to ensure fairness, corporate farmers argue that they already face higher operating costs and risks compared to traditional landowners. Nonetheless, including corporate farms in the tax net is seen as an essential step to prevent large-scale agricultural enterprises from escaping their fiscal responsibilities.
The Livestock Sector’s Special Position
The livestock sector represents a significant share of Pakistan’s agricultural economy, with millions of households relying on it for sustenance and income. Traditionally, this sector has enjoyed generous tax exemptions, justified on the grounds that small-scale livestock farming is often subsistence-oriented rather than commercial.
The IMF, however, insists on eliminating these exemptions by October 2024. Farmers in both rural and semi-urban areas fear that taxing livestock will directly affect their ability to maintain household livelihoods. Provincial governments face the politically sensitive task of deciding whether to comply fully with the IMF’s demand or to negotiate phased implementation.
Food Security and Inflation Concerns
Critics of the IMF’s proposal warn that aggressive taxation of agriculture could exacerbate food security challenges. Higher taxes on farmers may lead to reduced investment in inputs, lower yields, and ultimately higher food prices for consumers. In a country where inflation already poses a major problem, further price hikes could fuel social unrest.
Farmers also caution that taxation on income combined with indirect taxes on agricultural services could create a double burden, making farming less viable. Policymakers thus face the delicate task of designing tax reforms that raise revenue without undermining food availability or affordability.
Political Risks for Provincial Governments
Implementing high agricultural income taxes carries substantial political risks for provincial governments. In provinces like Sindh and Punjab, where landowning families dominate political institutions, introducing steep tax rates could alienate key supporters. Politicians who attempt to push reforms risk backlash not only from farmers but also from their own legislative colleagues.
This has historically been the reason why agricultural taxation has remained minimal. The IMF’s involvement introduces external pressure, but internal political dynamics may still derail or dilute reforms. Balancing international commitments with domestic political survival will test the resilience of provincial leadership.
International Comparisons in Agricultural Taxation
Looking beyond Pakistan, other countries provide useful comparisons in handling agricultural taxation. In India, agricultural income is exempt at the federal level but taxed by states, creating a similar structure to Pakistan. However, enforcement remains weak due to political sensitivity. In contrast, Brazil has developed a comprehensive taxation framework that includes agriculture as part of its broader economic system, generating significant revenue without completely alienating farmers.
Turkey provides another example, where agricultural producers are taxed progressively, but small-scale farmers receive targeted subsidies to offset the burden. These international experiences highlight the importance of balancing revenue needs with social protections, a lesson that Pakistan’s provinces could adapt to their own circumstances.
Farmers’ Protests and Social Mobilization
As discussions on taxation intensify, farmer unions and associations have begun voicing their opposition more forcefully. Protests in different parts of the country have highlighted concerns about rising input costs, reduced subsidies, and the looming threat of higher taxes. Farmers argue that they are being unfairly targeted to meet fiscal shortfalls created by other sectors’ inefficiencies.
Some organizations have even threatened large-scale mobilization if provincial governments attempt to implement IMF’s recommendations without consultation. The growing unrest suggests that agricultural taxation could evolve from an economic debate into a broader social movement with political consequences.
Transparency and GST on Services
Another element of the IMF’s reform package involves the expansion of the general sales tax on services, which falls under provincial jurisdiction. Provinces are being asked to eliminate exemptions and apply GST more uniformly across sectors. The IMF argues that this will reduce loopholes and improve transparency in revenue collection.
Farmers, however, worry that the combination of income tax and service tax could compound their financial burdens, particularly if applied to services essential for farming, such as transport, irrigation, or storage. Provincial governments are caught between meeting transparency demands and avoiding public backlash from overtaxing the rural economy.
Broader Challenges in Rural Economies
Tax reforms cannot be viewed in isolation from the broader challenges facing rural economies. Many farming communities lack access to modern equipment, irrigation, and credit. Rising costs of fertilizers and pesticides, coupled with fluctuating crop prices, already strain household budgets.
Without parallel investments in infrastructure and rural development, taxation could be seen as exploitative rather than reformative. Policymakers must recognize that sustainable taxation depends on building the capacity of farmers to generate higher, more stable incomes. This requires coordinated efforts in modernization, subsidies, crop insurance, and better access to markets.
Implementing Agricultural Tax Reform
Pakistan stands at a crucial economic junction, where fiscal reforms have become inevitable to restore macroeconomic stability. Among the boldest measures proposed by the International Monetary Fund is the introduction of a standardized agricultural income tax of up to 45 percent, aimed at aligning it with rates for non-salaried business individuals.
As provinces prepare to comply with the IMF’s structural benchmarks by early 2025, the conversation now turns toward practical implementation, administrative preparedness, and the projected impact on national revenue, credit ratings, and economic equity.
Tax System Overhaul: Beyond Constitutional Limitations
While constitutional constraints prohibit the federal government from taxing agricultural income directly, the IMF’s strategy avoids a legal conflict by pushing provinces to adopt reforms themselves. This approach requires synchronized efforts across provincial tax bodies, revenue boards, and agricultural departments.
As of now, there is no single uniform methodology for valuing farm income, recording land productivity, or estimating costs across provinces. Implementation will demand more than legislation—it will require operational infrastructure capable of assessing and enforcing the tax uniformly, fairly, and efficiently.
Assessing Agricultural Income: A Data Deficit
One of the most significant challenges in enforcing an agricultural income tax is the lack of reliable data on income levels from farming. While landholding records are available through provincial revenue departments, these records often do not reflect actual productivity or earnings.
Many farmers underreport their income or fail to maintain proper documentation. In such a setting, applying a standardized tax rate becomes problematic. Introducing third-party audits, modern recordkeeping, and digital platforms for income declarations will be essential to ensure that the tax system is not only implemented but also trusted.
Capacity of Provincial Revenue Authorities
Tax authorities at the provincial level will be required to dramatically upscale their operations. This includes hiring trained staff, developing IT infrastructure, setting up field units for verification, and designing procedures for appeals and dispute resolution.
Most provincial revenue departments are currently understaffed and rely heavily on outdated manual processes. Implementing an income-based agricultural tax will necessitate digitization, satellite-based land monitoring, and integration with national financial databases to cross-reference income and expenditures.
Revenue Potential and Projections
According to estimates by the World Bank, taxing farm income effectively could yield revenue equivalent to approximately one percent of Pakistan’s GDP—around Rs1.22 trillion annually. This figure has major significance in a country where the tax-to-GDP ratio has been consistently low. Agricultural income has long remained one of the largest untaxed sectors despite contributing nearly one-quarter of GDP.
By bringing this segment into the tax net, Pakistan can create a broader, more equitable base that reduces the burden on salaried and industrial segments. If implemented effectively, this reform could be one of the most transformative in the country’s fiscal history.
Economic Equity and Tax Fairness
One of the primary arguments in favor of taxing agricultural income is that it promotes fairness in the tax system. At present, salaried workers face rates as high as 35 to 39 percent on monthly incomes of Rs341,000 and Rs833,000, respectively, while many wealthy landowners pay little to no direct taxes.
Aligning tax rates across income sources—whether they come from factories, shops, or farms—addresses this imbalance. Equal treatment of income sources discourages tax avoidance and builds public trust in the government’s fiscal management.
Distinguishing Smallholders from Commercial Agriculture
A key aspect of this reform is the necessity to differentiate between subsistence farmers and commercial agricultural enterprises. Smallholders, who produce mainly for household consumption and operate on marginal earnings, should not face the same tax burden as large-scale commercial farmers.
Many policy experts advocate for a tiered system based on net income and landholding size. Such a structure would exempt genuinely low-income households while applying progressive tax rates to higher-income agricultural entities. Establishing this balance will be crucial to ensure the reform is socially sustainable and politically acceptable.
Role of Technology and Land Digitization
Technology can play a transformative role in the administration of agricultural income taxes. Digital land record systems, satellite imagery, and GIS-based tools can be used to monitor crop cycles, estimate yields, and evaluate land productivity. Several provinces have already embarked on land digitization initiatives, which can now be extended to tax administration.
With proper geotagging and crop data, provincial authorities can develop income estimations that reflect real productivity rather than relying on self-reported data. Integration with mobile banking platforms could also simplify tax payments for rural populations.
Integration with Banking and Agricultural Subsidies
An efficient taxation system should be integrated with broader financial and agricultural support mechanisms. For instance, farmers who comply with tax regulations could gain preferential access to subsidies, crop insurance, or soft loans. This would incentivize formal participation in the economy while minimizing evasion.
Additionally, banks and financial institutions could be required to collect and report agricultural income data, particularly when disbursing loans or subsidies. These linkages would not only support revenue generation but also help farmers navigate formal financial systems.
GST on Services and Farm Input Costs
While the IMF has encouraged provinces to expand the general sales tax base on services, farmers remain wary of cascading costs. Services critical to farming—such as storage, transportation, warehousing, and machinery rental—may become costlier if taxed heavily.
Policymakers must ensure that the combination of income tax and GST does not lead to input cost inflation that could shrink farmer margins. One potential solution is offering tax credits or rebates for essential agricultural services to maintain affordability while maintaining transparency in service taxation.
Phased Implementation Strategy
Given the complexities involved, a phased implementation strategy is advisable. Provinces could begin by targeting large landholders and corporate farms where income data is more readily available. Over time, the net can be expanded to include mid-sized and small commercial farmers.
Simultaneously, systems for documenting farm income and costs can be developed in collaboration with agricultural cooperatives, local government units, and rural extension agencies. A gradual rollout will allow for capacity building and public awareness, reducing the risk of confrontation and resistance.
IMF Timelines and Political Sensitivities
The IMF has set a deadline of January 2025 for provincial governments to align agricultural income taxes with federal benchmarks. While this timeline serves as an accountability mechanism, it may be too aggressive given the level of preparation required.
Provincial leaders may request phased extensions or conditional waivers depending on political and administrative readiness. However, failure to meet benchmarks may affect negotiations for the next tranche of IMF funding, placing additional pressure on both federal and provincial administrations.
Public Communication and Awareness
Introducing such a major fiscal change requires clear and sustained communication with the public. Many rural communities are unaware of the proposed reforms or misunderstand their implications. Miscommunication could result in panic, distrust, or protests.
Provincial authorities must therefore invest in public education campaigns using local languages and accessible media. Public seminars, field visits, and collaboration with farmers’ organizations can help clarify who will be taxed, at what rate, and what exemptions will apply. Transparency will be key to building confidence and minimizing opposition.
Lessons from Past Reforms
Pakistan’s history is filled with examples of attempted tax reforms that failed due to poor execution, lack of consultation, or political pushback. In 1996, an effort to tax agricultural income nationwide collapsed due to resistance from provincial elites. More recently, property tax reforms stalled in several regions due to lack of digitization and legal clarity.
Learning from these episodes, the agricultural income tax reform must be rooted in a realistic assessment of provincial capacity, stakeholder engagement, and legal consistency. Building institutional mechanisms to monitor progress, audit outcomes, and address grievances will improve the odds of long-term success.
Risks to Economic Stability
If poorly implemented, agricultural tax reform could destabilize the rural economy. Over-taxation or faulty assessments could lead to a fall in production, especially of key food staples, triggering supply shocks. Income reduction among farmers could also reduce rural consumption, affecting demand for goods and services in local economies.
Further, political protests by agricultural communities could result in policy rollbacks, undermining investor confidence and delaying IMF disbursements. Thus, while the reform offers fiscal opportunity, it carries real risks that must be anticipated and mitigated.
Opportunities for Fiscal Transformation
Despite the risks, the potential benefits of reform are substantial. If the provinces succeed in expanding the tax net to include agricultural income equitably, Pakistan could significantly reduce its reliance on indirect taxes, improve its credit rating, and fulfill IMF conditionalities.
This would not only enhance the country’s fiscal sustainability but also lay the foundation for better public investment in health, education, and infrastructure. Most importantly, it would mark a departure from a system where some sectors bear disproportionate tax burdens while others remain largely untaxed.
Linking Tax Reform to Development
Taxation, when used responsibly, can become a tool for development rather than simply a revenue mechanism. Revenues collected from agricultural income taxes could be ring-fenced for rural development programs—improving irrigation, road access, seed quality, and extension services.
This would ensure that the benefits of taxation are visible and tangible to the very communities being taxed. Creating such a feedback loop would help overcome resistance and encourage voluntary compliance. Accountability mechanisms, such as citizen oversight committees or public dashboards, could further strengthen trust in the system.
Conclusion
Pakistan’s journey toward agricultural income tax reform reflects a broader struggle between economic necessity and political reality. The proposal from the International Monetary Fund to align farm income taxation with rates applied to other income sources represents one of the most ambitious fiscal reforms in recent history. For decades, agriculture has remained under-taxed despite being a cornerstone of the national economy, contributing nearly a quarter of GDP while generating only a fraction of overall revenue.
By moving toward a system where agricultural income is taxed at up to 45 percent, the government aims to close a glaring disparity, broaden the tax base, and secure vital IMF support to stabilize its economy. The reform promises significant benefits: increased revenue estimated at over Rs1.22 trillion, improved fairness across income groups, and stronger prospects for fiscal sustainability. Yet the path to implementation is fraught with challenges. Weak provincial capacity, lack of reliable income data, political resistance from powerful landholding elites, and the risk of burdening small farmers could derail progress if not addressed with care.
The key to success will lie in balancing equity with efficiency. Differentiating between subsistence farmers and large-scale commercial operators is essential to prevent social backlash and safeguard food security. At the same time, robust administrative reforms, technological integration, and transparent communication with stakeholders will determine whether this policy can transition from paper to practice. Linking revenues from agricultural taxes directly to rural development could also build legitimacy and ensure that those taxed see tangible benefits in return.
Ultimately, the proposed agricultural income tax is not just a fiscal measure, it is a test of political will, institutional capacity, and social fairness. If implemented effectively, it could reshape Pakistan’s fiscal landscape, reduce dependence on indirect taxation, and set the stage for sustainable economic stability. Failure, however, would not only deepen existing inequities but also jeopardize critical IMF support and weaken the country’s credit standing. The months ahead will reveal whether Pakistan can translate this historic opportunity into lasting reform.