Business Recorder Editorials 9th September 2026

Fiscal reforms’ missing piece

EDITORIAL: Finance Minister Muhammad Aurangzeb’s recent assurance that the government will “stay the course” on fiscal reforms, coupled with the Asian Development Bank’s call for urgent action to broaden Pakistan’s narrow tax base comes at a critical juncture.

The government has made meaningful progress in restoring fiscal discipline, but it would be a mistake to equate a lower fiscal deficit with a fundamentally stronger revenue system.

Pakistan has reduced its fiscal deficit to around 2.6 percent of GDP, its lowest in 22 years, and recorded three consecutive primary surpluses. These are undoubtedly significant achievements, but the reality is that the harder reform remains unfinished.

The central weakness is that much of the improvement in tax collection has come from extracting more from existing taxpayers, rather than bringing enough new taxpayers into the tax net. FBR collections have risen 40 percent over two years to Rs13 trillion, while the tax-to-GDP ratio has improved from 8.8 percent to 10.3 percent.

The finance minister has rightly identified 13 percent as a longer-term target, but reaching it sustainably will require a substantially wider tax base, not a heavier burden on those who are already documented and compliant. This is where Pakistan’s reform record remains deeply frustrating. Salaried individuals and the formal corporate sector are relatively easy targets because their incomes and transactions are visible. They consequently carry a disproportionate share of the tax burden.

Meanwhile, large segments of the economy remain either lightly taxed or outside the effective tax net altogether. Retail, wholesale trade, real estate and other sectors with substantial economic activity continue to enjoy preferential tax treatment.

The retail sector is a clear example of how political expediency has allowed parts of the economy to enjoy a lighter tax burden. Successive governments have promised to bring this sector fully into the tax net, unveiling scheme after scheme, only for vested interests, weak enforcement and political retreat to consign most to failure.

Retailers have repeatedly demonstrated their nuisance value, threatening protests and strikes at the first sign of new taxation initiatives, forcing governments to capitulate.

Now, once again, the government is turning to measures such as digital invoicing, track-and-trace, faceless customs and digital production monitoring. Technology can undoubtedly improve documentation, reduce human discretion and strengthen compliance. But the fact remains that technology is an instrument, not a substitute for political will.

No digital platform can overcome the reluctance to confront powerful constituencies or the FBR’s repeated dilly-dallying in identifying and pursuing new sources of revenue.

The ADB has correctly framed the issue as one of fiscal sustainability. A broader and more efficient revenue base would reduce the government’s dependence on borrowing to finance essential functions of the state.

Stronger domestic resource mobilisation would create greater fiscal space for health, education and infrastructure, while reducing the pressure that debt servicing places on scarce public resources.

Most importantly, Pakistan cannot escape its familiar boom-and-bust cycles if every period of growth eventually produces widening fiscal and trade deficits, rising borrowing and another stabilization programme. Sustainable growth requires a state capable of financing its responsibilities from a broad, predictable and equitable tax base.

The government therefore needs to move beyond the easier task of extracting more revenue from the same taxpayers and confront the harder questions of who is still not paying, why they are not paying and why successive dispensations have failed to bring them into the net.

Technology and better administration cannot compensate for lack of political will to bring under-taxed sectors into the fold. It must be recognised that a wider tax base remains non-negotiable for lasting fiscal stability. Any reform effort that fails to make broadening the tax net its central objective risks merely postponing Pakistan’s next fiscal crisis.

Protecting children online

EDITORIAL: The findings of UNICEF report on the scale of online sexual exploitation and abuse of children should serve as an urgent alert to governments, technology companies, parents and society at large.

Based on nationally representative surveys conducted between 2020 and 2025 among around 21,000 internet-using children in 21 countries, including Pakistan, Kenya, Brazil and Serbia, the report estimates that around 20 million children experienced some form of sexual exploitation or abuse online in a single year. This represents not an isolated problem but a rapidly expanding child-protection crisis that is crossing borders and exploiting the reach of digital technology.

A particularly worrying aspect of the report is the role of social media. Nearly 60 per cent of reported cases occurred on platforms such as Facebook, WhatsApp, Instagram, Snapchat and TikTok, while online gaming accounted for another significant share. These platforms have become an integral part of children’s lives, but their enormous reach and relative anonymity can also provide offenders with unprecedented opportunities to target vulnerable young people.

The problem is further complicated by the fact that more than half of the cases involved someone the child already knew, showing that the threat does not come only from anonymous strangers online.

The extremely low reporting rate is another cause for concern. Fewer than one per cent of cases were reported to the police, a social worker or a helpline, pointing to serious gaps in protection and support systems. Children tend to remain silent because of shame, fear, threats, social stigma or uncertainty about where to seek help.

Governments therefore need to establish accessible, confidential and child-friendly reporting mechanisms, while schools should teach children not only how to use technology safely but also how to recognise manipulation, coercion and online grooming.

Technology companies, too, have a clear responsibility. Platforms must invest in age-appropriate design, effective age verification, rapid reporting and response mechanisms, stronger moderation and proactive detection of exploitation.

Independent audits should determine whether these measures are actually effective rather than relying solely on assurances from technology companies. Parents also need greater awareness of the risks children face online and should be encouraged to create an environment in which children can seek help without fear of blame or punishment.

The emergence of artificial intelligence makes the situation even more urgent. UNICEF’s finding that an estimated 1.1 million children in nine countries had AI-generated sexual images or videos created depicting them shows how technology can amplify existing forms of abuse.

Children can now be victimised without an actual photograph ever being taken, making conventional approaches to child protection increasingly inadequate. The psychological consequences are equally alarming: children subjected to technology-facilitated sexual exploitation were significantly more likely to report suicidal thoughts, self-harm and anxiety. The damage, therefore, extends far beyond the digital space.

Keeping children away from technology is neither realistic nor desirable. The task is to make the digital environment safe. Governments must strengthen laws and enforcement, schools and parents should improve digital awareness, and technology companies must accept that child safety is a responsibility, not a public-relations exercise.

Protecting children online ought to be recognised as a basic public-safety obligation, not an optional feature of the digital economy.