EACH successive federal government budget reaffirms the scale of Pakistan’s fiscal crisis. This year’s was no different. With debt-servicing and pension payment requirements consuming over half of the federal government’s expenditure and a tax-to-GDP ratio languishing at just over 10 per cent — well below countries at similar income levels — the budget exercise is largely an exercise in harnessing revenue. In a context marked by deepening fiscal constraint, wealth taxes offer a potential solution, as they have done in many other countries. However, the assumption in Pakistan is that such measures would be deeply unpopular with the public.
Our new research suggests this assumption may be wrong. In 2024, we conducted the first comprehensive nationwide survey examining Pakistani attitudes towards wealth taxation, polling 7,500 adults across the country. The findings challenge conventional wisdom about public resistance to progressive taxation and offer a roadmap for designing politically viable tax reforms.
The results reveal surprising levels of support for various forms of wealth taxation. Over 40pc of respondents back the introduction of a new general wealth tax — a figure that, while not overwhelming, suggests such proposals are far from the political non-starters they’re often assumed to be. And, in fact, if we asked people about specific proposals that would tax wealthier individuals in a progressive way, we found overwhelming support. Proposals such as higher top income tax rates, capital gains taxes, and corporate income taxes, remain fairly popular.
These findings matter because Pakistan’s history regarding wealth taxation has been marked by failure. Previous attempts, including estate duties introduced in 1950 and wealth taxes implemented in 1963, collapsed under pressure from elites and were eventually abolished. The government’s recent reintroduction of the capital value tax in 2022 — which has already generated Rs14.4 billion in FY2025 — suggests emergent political will, but sustaining such reforms will likely require broader public backing to overcome potential challenges.
Policymakers should focus on designing reforms that address public concerns about fairness and government accountability.
Our research identifies three key insights that could transform how policymakers approach wealth taxation.
First, opposition to wealth taxes doesn’t come from where one might expect. Contrary to assumptions about self-interested resistance, our study finds higher-income individuals are actually more likely to support new wealth taxes. This counterintuitive finding suggests that economic self-interest isn’t the primary driver of tax attitudes. Instead, support for wealth taxation correlates strongly with broader views about inequality and the state’s role in addressing it.
People who believe too much of Pakistan’s wealth is concentrated among too few, and who see state-led redistribution as necessary for helping the poor, are more likely to back wealth taxes regardless of their own income level. This points to an important political opportunity: wealth tax reforms could potentially build coalitions that cross class lines if properly framed around principles of fairness and social justice.
Second, trust in government institutions emerges as the crucial factor determining support for wealth taxation. Respondents who express greater confidence in the national government and believe in the state’s legitimacy are significantly more likely to back new wealth taxes. Conversely, those who think the government is likely to misuse tax revenues are much less supportive.
This finding is particularly challenging given Pakistan’s low-trust political environment. In our survey, 60pc of respondents expressed little or no confidence that government acts in ordinary people’s interests, while 57pc believe the state is likely to misuse tax revenues. Such scepticism creates a vicious cycle: low trust undermines support for progressive taxation, which in turn limits the state’s capacity to demonstrate effective governance through improved public services.
Third, policy design and communication can significantly influence public attitudes. Our research demonstrates that the way in which wealth taxes are structured and presented to the public matters enormously for building support.
Consider inheritance taxes, traditionally viewed as particularly unpopular in Pakistan due to religious and cultural concerns. When respondents were asked about introducing such a tax without providing details, a majority opposed it. However, when we specified that the tax would only apply to inheritances exceeding Rs10 million — roughly $35,000 — the majority of respondents supported it. This suggests that opposition often stems from fears about affecting ordinary families rather than principled objections to the concept itself.
Similarly, wealth taxes that include specific accountability mechanisms enjoy much higher support. When we asked about hypothetical wealth taxes that would be earmarked exclusively for helping the poor, or that would give taxpayers some say in how revenues are spent, support jumped dramatically. These variations in policy design point to practical ways of building broader political coalitions for progressive tax reform.
The implications extend beyond Pakistan’s borders. Across the developing world, governments face similar pressures to expand their tax bases while confronting elite resistance to progressive taxation. Our findings suggest that policymakers may be underestimating the potential for popular support for wealth taxes, particularly when these are designed with transparency and accountability built in.
For Pakistan specifically, these insights offer a pathway forward. Rather than assuming wealth taxes are politically impossible, policymakers should focus on designing reforms that address public concerns about fairness and government accountability. This means being explicit about progressive thresholds that protect ordinary families, incorporating robust transparency mechanisms, and creating channels for public input on how revenues are used.
The current fiscal crisis demands action that goes beyond the repeated use of conventional tax instruments that are increasingly levied on a narrow and captive base. Our research suggests that Pakistanis are more open to progressive taxation of various forms than is commonly assumed, provided they have confidence that such taxes will be fairly implemented and effectively used.
The question now is whether policymakers can act on this opportunity. With proper design and communication, progressive and wealth tax reforms could build the broad-based support needed to overcome elite resistance and establish a more equitable and sustainable fiscal foundation for the state.
Max Gallien and Vanessa van den Boogaard are researchers at the International Centre for Tax and Development. Umair Javed teaches at Lums. (Dawn)