Coercive Tax Recovery A Risky Path Forward

TheTax Laws (Amendment) Ordinance, 2025 grants the Federal Board of Revenue (FBR) sweeping new powers aimed at accelerating tax recovery. These changes, while ostensibly designed to plug revenue leaks and reduce the backlog of tax disputes pending in courts, mark a troubling departure from the principles of due process and judicial oversight enshrined in Pakistan’s Constitution.
Under the ordinance, the FBR can now freeze bank accounts, attach movable and immovable properties, and seal business premises without prior notice once a court ruling goes against the taxpayer. The board is further empowered to post its officials directly at business sites to monitor production and inventory, a move seen as invasive and likely to disrupt operations. These measures are meant to curb tax evasion and prevent businesses from using legal technicalities to delay compliance. However, the implications for civil liberties and business confidence are severe.
Trade bodies have, unsurprisingly, voiced strong opposition. Their concerns revolve around potential violations of Article 10A of the Constitution, which guarantees the right to a fair trial and due process. The ordinance effectively bypasses these protections by denying taxpayers the opportunity to seek relief or stay orders from the courts before coercive action is taken. This undermines not just the judiciary’s authority but also the broader legal framework designed to ensure checks and balances in governance.
Moreover, the FBR’s new powers risk being misused. Pakistan’s tax system is already widely regarded as inequitable and prone to corruption. Instances of tax officials employing high-handed tactics to meet arbitrary targets are well-documented. Granting even more coercive authority to an institution that struggles with credibility and accountability could lead to further harassment of compliant taxpayers and discourage investment.
The government’s frustration with delays in tax litigation is understandable. Billions of rupees remain stuck due to protracted court proceedings. Yet, instead of addressing judicial inefficiencies or reforming tax administration, the state appears to be opting for brute force. This short-term approach may help inflate revenue figures but will do little to foster a sustainable, equitable tax culture.
What Pakistan needs is not more coercion but a modern, transparent tax system built on trust and fairness. Legal and institutional reforms, digitization, and improved dispute resolution mechanisms would serve far better than draconian powers that erode taxpayer rights. In seeking to enhance compliance, the government must not abandon constitutional safeguards. Otherwise, it risks opening a Pandora’s box that will hurt the economy more than it helps the exchequer.