There is something deeply insulting about a government taking money from people with one hand and returning a fraction of it with the other, then presenting the transaction as compassion. This is increasingly how economic relief works in Pakistan. The state raises the cost of fuel, collects a large petroleum levy from every litre sold, watches that cost travel through transport, electricity, food and almost every household expense, and then announces a targeted subsidy for selected consumers. The language is always reassuring. Relief package, targeted assistance, support for vulnerable families, digital disbursement, but beneath the language is a simpler reality. The government first makes life more expensive and then asks citizens to appreciate the money it gives back.
The problem is not that subsidies are always wrong. A genuine subsidy can protect people from a sudden economic shock. The problem begins when a subsidy is used to disguise a policy that is itself making ordinary life more expensive. If the state knows that fuel prices affect the cost of transportation, food, electricity, agriculture and almost every service, then it also knows that a broad fuel burden cannot be corrected by a narrow cash transfer. The motorcycle owner may receive some assistance, but the daily wage worker who uses public transport still pays more. The family that owns no vehicle still pays the higher price embedded in food and household goods. The student travelling to college, the patient travelling to hospital and the worker travelling to work all absorb the increase whether or not their CNIC appears on a government database.
This is where Pakistan’s approach to fiscal policy becomes increasingly difficult to defend. The petroleum levy has become one of the government’s most dependable sources of revenue because it is easy to collect and almost impossible for ordinary citizens to avoid. Every litre carries the charge regardless of income. A wealthy household and a low-income motorcycle rider pay the same levy per litre. A commercial vehicle passes the cost into freight rates. A farmer absorbs it through transport and machinery. A shopkeeper passes it into prices. Eventually, almost everyone pays, including people who never receive a direct subsidy. It is efficient for the tax collector precisely because it is so difficult for the citizen to escape.
The government will naturally argue that the revenue is necessary. Pakistan needs money for debt servicing, defence, salaries, development and public services. The fiscal deficit cannot simply be wished away. The IMF programme places limits on how much the government can spend and how quickly it can reduce revenues. All of this is true. But fiscal necessity does not make every fiscal choice inevitable. There is a fundamental difference between saying that the state needs revenue and saying that the easiest people to tax should always be the people who pay it. When governments repeatedly rely on fuel charges, electricity bills, indirect taxes and consumption taxes while struggling to bring powerful sectors into a genuinely broad tax net, the issue is no longer simply revenue collection. It becomes a question of who the state considers easiest to burden.
That is why the comparison with other countries matters. Serious economic reform is not simply about extracting more from citizens. It is about widening the base, improving compliance, reducing waste and ensuring that those with greater capacity contribute proportionately more. A government that cannot tax wealth effectively will keep taxing consumption. A government that cannot confront entrenched privilege will keep calling higher utility bills reform. A government that cannot reduce its own waste will keep asking households to consume less. Eventually the word reform itself begins to lose meaning.
There is also a dangerous illusion in targeted subsidies. They look modern because they are digital. They come with registration portals, databases, verification systems and carefully designed eligibility criteria. But digital delivery cannot turn an unfair policy into a fair one. It can make distribution more efficient, but it cannot answer the more basic question of why the state is collecting so much from everyone and returning so little to some. A person who does not qualify for assistance does not become less affected by inflation. A family without a vehicle does not become immune to higher transport costs. A poor household does not stop being poor simply because its name is absent from a subsidy list.
The deeper problem is that Pakistan increasingly treats symptoms instead of causes. When fuel becomes expensive, announce a subsidy. When electricity becomes unaffordable, announce another package. When food prices rise, announce a relief programme. When salaries lose purchasing power, offer temporary assistance. Each intervention may provide some short-term help, but the underlying system remains untouched. The result is an economy in which citizens are taxed through prices and compensated through schemes, while the state congratulates itself for helping people survive the consequences of its own policies.
There is a better principle. If a government genuinely wants to protect the vulnerable, it should reduce the burden at its source, broaden direct taxation, eliminate unnecessary exemptions, improve tax enforcement, cut wasteful expenditure and make those with greater income and wealth carry a greater share of the adjustment. Relief should be the safety net, not the economic strategy. The real test of economic policy is not how much relief a government announces, but how many people can live without needing relief in the first place. A state that keeps making survival more expensive cannot claim credit for helping people survive.