Written by Hamza Shahnawaz in Taxation Tax Expenditure Report 2026 says separate estimates do not reflect the total revenue impact of removing all tax concessions. ISLAMABAD: The Federal Board of Revenue (FBR) has clarified that the estimated fiscal cost of individual tax expenditure provisions cannot simply be added together to determine the total revenue the government would generate by abolishing all tax concessions. According to the Tax Expenditure Report 2026, each tax expenditure is calculated independently on the assumption that every other provision of the tax system remains unchanged. As a result, the sum of individual estimates does not represent the actual revenue that would be realised if all exemptions, deductions, tax credits and other concessions were withdrawn simultaneously. Independent Estimates The FBR explained that every tax expenditure included in the report is assessed on a standalone basis rather than as part of a broader package of tax measures. This methodology is intended to estimate the fiscal cost of each individual provision while assuming that the remainder of the tax system continues to operate without any changes. The report cautioned that adding these separate estimates together would produce misleading results because it ignores the interaction between different tax provisions. Progressive Tax Structure One of the principal reasons identified by the FBR is Pakistan’s progressive income tax system, under which higher levels of taxable income are subject to higher tax rates. According to the report, multiple deductions and exemptions can reduce a taxpayer’s taxable income sufficiently to place them in a lower…