Engineer Arshad H Abbasi
There is something deeply tragic about Pakistan’s taxation system. It is not merely broken — it is deceived and destroyed. Not by data, not by design, but by the men who rule it.
In the latest technical-level talks, the International Monetary Fund (IMF) raised alarms: a Rs1.2 trillion revenue shortfall now shadows the Federal Board of Revenue (FBR), far below its Rs.12.97 trillion target for fiscal year (FY) 2024–25. The IMF’s concerns are justified. However, the deeper question remains — has the IMF ever examined who leads the FBR?
Since August 2024, it has been headed by a bureaucrat whose career defines Pakistan’s culture of rewarded failure. According to management thinkers like Peter Drucker, Henri Fayol, and Chester Barnard, ultimate responsibility rests with top management. In Pakistan, failure is recycled at the top — never retired, only reassigned.
Before becoming FBR Chairman, this man was CEO of National Power Parks Management Company Limited (NPPMCL), which owns the Haveli Bahadur Shah and Balloki LNG power plants. The Power Purchase Agreements of these projects contain a clause so absurd it defies logic: disputes between two state-owned entities must be resolved at the London Court of International Arbitration. Nowhere else does a country surrender sovereignty so cheaply.
These plants are engines of circular debt, draining Pakistan through expensive generation. Moreover, when this debt ballooned, who was the Secretary Power Division for over two years, too? The same man is now tasked with tax reform. Even the incumbent Prime Minister, speaking at the World Economic Forum, admitted that circular debt had turned Pakistan into a “global begging bowl.” Yet the bureaucrat who oversaw it was promoted — not punished or even reprimanded. The man who failed to manage energy now collects the nation’s revenue.
How can reform rise from ruin? How can transparency bloom in a garden watered by corruption? While the IMF advocates technology-driven transformation, Pakistan’s bureaucracy clings to its manual empire. The Fund believes Artificial Intelligence (AI) and Generative AI (GenAI) can redefine tax administration — giving governments a human-like understanding of citizens’ needs.
Across the world, tax systems are being reborn. Singapore uses a multilingual virtual assistant that halves call-centre demand. South Korea employs an AI guide to help citizens file taxes. France uses AI to draft responses for civil servants. Even Madagascar is modernizing customs through GenAI to curb fraud.
These examples show how AI can bridge the gap between taxpayers and administration, simplify laws, and build trust. However, in Pakistan, the FBR’s own AI-based Customs Clearance and Risk Management System met an early death. Launched to enhance transparency, it drowned in inefficiency — a fate sealed not by technology, but by bureaucracy.
The total cost to transform FBR into AI is merely the corruption at FBR and taxation in a month. This rough estimate of Engineer AHA lays bare the cruel irony: Pakistan can afford technology; it cannot afford integrity.
The IMF’s idea is simple: GenAI can help officials focus on analysis instead of paperwork, reduce corruption through automation, and give taxpayers clarity. The United Kingdom’s HMRC uses “Connect” to flag undeclared income; the U.S. IRS deploys machine learning to uncover identity-theft frauds, recovering hundreds of millions; Austria relies on predictive analytics that brought in €185 million in 2023. Between 2020 and 2024, global tax-evasion detection rates doubled — recovering an additional $120 billion.
However, Pakistan’s tax system remains an island of inefficiency — not because we lack technology, but because we lack trust.
At the heart of the crisis lies the Pakistan Administrative Service (PAS). The state treats these officers as the solution to every problem. They drift effortlessly from one ministry to another — energy today, revenue tomorrow — accumulating power but not knowledge. They reign like modern nobles, preserving their dominion rather than serving the republic.
This is not administration; it is a monarchy. A bureaucratic monarchy — unelected, unaccountable, and untouchable. They fail upward, mastering the art of survival. The dilemma of taxation is the government’s unshakable belief that PAS officers are the panacea for all Pakistan’s ills. Until that faith breaks, no AI will bring transparency, and no reform will succeed.
If energy security were treated as an element of national security, as in the United States or India, the same chairman would be facing a treason act, not a reward. Turning a nation into a global debtor should invite accountability, not promotion. Yet Pakistan’s administrative system rewards collapse as experience.
Pakistan could do the same. Instead, every attempt to automate collides with bureaucratic resistance. Transparency threatens entrenched privilege. Automation endangers patronage. Therefore, projects stall, committees multiply, and reform is buried under procedure. The bureaucracy survives; the taxpayer suffocates.
Globally, the IMF envisions AI humanizing tax relations — transforming compliance into cooperation. However, Pakistan’s bureaucrats fear such light. An intelligent system that documents every decision, that answers directly to taxpayers, would shatter their feudal grip. In their world, data is dangerous, and transparency is treason.
The FBR remains stuck in its paper maze, guarded by the same hands that built it. Meanwhile, nations that once looked to Pakistan for inspiration now outpace it in technology, governance, and growth. The tragedy deepens not because we lack capacity, but because those in power fear change more than failure.
Unless the state dismantles its blind faith in the Pakistan Administrative Service (PAS), the dream of an AI-driven, transparent taxation system will remain an illusion. The PAS elite understand the art of not losing power — their kingdom serves them as royally as monarchies of the Middle East. They will never willingly surrender it.
The IMF can continue to advise, to negotiate, to warn. However, no mission can fix a nation that refuses to hold its leaders accountable. In Pakistan, failure is inherited, and mediocrity institutionalized. The FBR, meant to serve citizens, now serves the very elite who captured it.
AI could have been our redemption — a tool to cleanse the system, to make taxation fair and efficient. Instead, it has become another missed opportunity, another ghost in the bureaucracy’s long hallway of broken reforms.
If leadership were merit-based, if accountability meant something, Pakistan would not be knocking at every door for aid. Nevertheless, we reward the architects of failure and punish the bearers of truth.
This is the essence of our tragedy: technology promises liberation, but bureaucracy ensures captivity. Until the bureaucratic monarchy falls, taxpayers will remain subjects, not citizens. And Pakistan — the nation that once dreamed of independence — will continue as a global begging bowl, not by destiny, but by design.
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Engineer Arshad H Abbasi, water and climate change expert, is co-founder of Energy Excellence Centres at NUST and UET Peshawar.