KARACHI: Pakistan’s banking sector has become the single-largest contributor to government revenue due to elevated taxation levels, according to the Pakistan Banks Association (PBA).
The association highlighted that while higher tax collections from banks have helped strengthen public finances in the short term, the growing tax burden is increasingly affecting the sector’s long-term sustainability and competitiveness.
The PBA noted that heavy corporate taxes are squeezing bank profitability, discouraging foreign direct investment, and restricting the industry’s capacity to extend credit to the private sector. Reduced lending capacity could ultimately slow business expansion and economic recovery.
Furthermore, mounting fiscal pressure on banks is hampering progress in financial inclusion and digital banking initiatives. Industry leaders stress that expanding access to formal financial services is essential for sustainable economic growth and improved financial stability.
The association urged policymakers to strike a balanced approach to taxation that ensures revenue generation without undermining the banking sector’s ability to support Pakistan’s broader economic development.
