This amount is more than what is spent on education, development, and health combined in some cases.

Ayesha Tabassum

We are often concerned with defense spending, development spending and all those that are visible to us. But what if I tell you that there are uncollected Tax Revenues that are termed Tax Expenditure, that decreases our tax revenue significantly. Tax Expenditure refers to tax that is not collected by firms, industries or could be any other entity as a sign to subsidize those entities, or to provide them with relief in difficult situations. For example, the government provides tax cuts to the agricultural sector to promote agricultural activities in the country. Now the question arises, are tax expenditure and subsidy two different phenomena?

The answer to this question is yes, and the key difference lies in tax expenditure’s invisibility in the budget. While subsidies are mentioned in the budget, Tax expenditures are not shown in the budget, even though it affects the tax revenue. There are further types of tax expenditures, through which the policy makers give tax holidays to certain sectors.

Tax Concessions, which refer to tax cuts given to specific sectors for their economic promotion. Like the government lowers the tax on importers of certain goods. Similarly, the textile industry enjoys various tax concessions, with a purpose to encourage export of textiles.

Read: Exemptions hit record as tax revenue falls short

Tax Waivers are short term or situation-based tax reliefs granted to taxpayers in difficult circumstances, such as during natural disasters, economic crises, and during other tough times. These can include partial or full cancellation of outstanding tax during mishaps but can be misused if not kept under observation.

The combined effect of Tax Concessions and waivers can be enormous, as according to some reports, Pakistan forgoes hundreds of billions of Rupees through tax expenditures. The economic survey reported that in fiscal year 2023-24, the tax expenditure cost the government over 2 trillion rupees in a single fiscal year, which is more than what is spent on education, development, and health combined in some cases.

Another major concern associated with this is equity. Despite the policy makers aiming to stimulate the economy, some of the large groups and corporations’ benefit from tax waivers. For example, tax amnesty schemes — a form of waiver — often reward those who have evaded taxes for years. Similarly, concessions to large export houses may crowd out smaller businesses resulting in more inequity.

Fiscal inefficiency is another problem. The tax cuts and reliefs continue to be applied to taxpayers even after the purpose is achieved. This is because such policies are not easy to roll back due to certain issues.

With these problems ahead, quick reforms are needed. First and foremost, tax expenditures must be added in the budget for transparency and clearly show which sectors are enjoying the perks. Secondly, the tax expenditure must come with clear clauses, where it should be stated that if a sector fails to deliver the objectives, the tax expenditures would be lifted as soon as possible.

To conclude, I would say that tax expenditures in the form of concessions and waivers are useful fiscal tools to promote investment and boost economic activity. Also, they prove helpful for the taxpayers in hard times. But, keeping it transparent reduces the chances of it getting exploited and misused. If ignored, it can become a huge fiscal burden, eroding the revenue significantly. For a country like Pakistan, having little fiscal space, bringing hidden fiscal costs under the light can improve the situation a lot!

Read – Digitalization: Pakistan Faces Challenges

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Ayesha Tabassum is student of School of Economics, Quaid-e-Azam University Islamabad

The post The Invisible Concessions and Waivers first appeared on Sindh Courier.

Nasir Aijaz

In a deeply concerning move, the federal government of Pakistan has proposed a tax on solar panels in the newly announced federal budget for the fiscal year 2025–26. The proposal initially included a steep 18 percent tax on solar energy equipment, sparking widespread outrage from the public, environmentalists, and lawmakers alike. Though the standing committees of both the National Assembly and the Senate firmly rejected the proposal, the government, (As stated by Deputy Prime Minister Ishaq Dar) responded by reducing the proposed tax to 10 percent rather than removing it entirely.

This decision, though appearing as a compromise, still delivers a harsh blow to a population already reeling under the weight of persistent energy shortages and skyrocketing electricity prices. The move is being widely criticized as unjust and counterproductive, especially at a time when solar energy had emerged as a hopeful alternative for the masses.

Solar: The Common Man’s Lifeline

Pakistan is grappling with one of the worst energy crises in its history. Across cities and rural areas alike, load shedding spans 12 to 15 hours daily, severely disrupting lives, livelihoods, education, and health services. In response, households and small businesses, unable to rely on the national grid, have increasingly turned to solar energy as a reliable and sustainable solution.

For many middle- and lower-income families, the installation of solar systems has been a one-time investment that ensures uninterrupted power during blistering heatwaves and allows children to study at night. In agriculture, solar tube wells are being used to draw groundwater in remote areas. In short, solar energy has become more than just an option—it is a necessity for survival and progress in the face of governmental failure to ensure consistent electricity supply.

A Regressive Tax on Hope

Imposing a 10 percent tax on solar panels, no matter how reduced from the original proposal, is still tantamount to taxing the sun itself. It disproportionately affects the average citizen, who is already burdened by inflation, joblessness, and utility costs.

It is particularly unjust because it penalizes those who are trying to help themselves and reduce their dependence on the crumbling public infrastructure. Instead of encouraging the shift toward renewable energy—a goal in line with global climate commitments—the government is effectively placing barriers in front of people seeking clean, affordable energy.

This decision also ignores the long-term economic and environmental benefits of renewable energy. Countries around the world are moving toward incentivizing solar adoption. In contrast, Pakistan seems to be going in the opposite direction, burdening the very population it should be empowering.

Politics over Public Welfare

The political justification given by the government—primarily the need to raise revenue—appears short-sighted when weighed against the long-term social and economic consequences. Pakistan’s tax base has historically been narrow, and rather than reforming elite taxation or eliminating corruption and wasteful spending, the state has chosen once again to place the financial burden on ordinary citizens.

Meanwhile, luxury cars, high-end electronics, and elite perks often escape meaningful taxation. This stark contrast exposes the disparity in governance, where convenience and comfort for the powerful are protected while basic necessities for the public are taxed.

The Way Forward

There is still time for the government to reverse this regressive policy. If energy self-sufficiency, environmental sustainability, and public welfare are genuinely national priorities, the tax on solar equipment should be removed entirely. Furthermore, rather than discouraging solar adoption, the government should actively subsidize solar installations, provide zero-interest loans to low-income families, and expand awareness of clean energy solutions.

Pakistan stands at a crossroads. The energy crisis can either deepen social inequality and unrest, or it can be turned into an opportunity for innovation, independence, and equity. But that will only be possible if policies are shaped by the needs of the people—not the pressures of short-term revenue generation.

In taxing solar panels, the government is not just taxing equipment—it is taxing hope, resilience, and the right to a dignified life. It is, quite literally, trying to put a price on sunlight.

Read: Elite Rewards, Commoners Bear the Cost

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The writer is a senior journalist based in Karachi. He can be accessed at nasir.akhund1954@gmail.com

The post Regressive Politics: Taxing the Sunlight first appeared on Sindh Courier.