In Pakistan, transportation isn’t just a service – it’s a lifeline. It connects daily wage earners to jobs, students to their futures, and families to opportunity. But as the cost of living rises and economic pressures mount, access to mobility is becoming increasingly unequal.
Pakistan’s 2025-26 federal budget won’t just determine national development – it will decide who has access to mobility and who is left behind. In the crowded arteries of Karachi and Lahore, inDrive drivers navigate not just potholes and traffic but an increasingly regressive tax system that penalizes access and punishes innovation.
What’s often missed in macroeconomic debates is that for many Pakistanis – especially women, students, and low-income workers – ride-hailing isn’t a luxury; it’s a necessity. Yet the state taxes it like a privilege.
As the digital economy evolves, it demands a new fiscal vocabulary, one that understands the difference between extractive monopolies and peer-powered mobility networks. This makes the 2026 budget not just a fiscal roadmap but an opportunity to create a fairer, greener, and more inclusive future. This includes a more equitable tax structure and rethinking the Goods and Services Tax (GST), which currently stifles accessibility and innovation.
Under the current system, every ride – whether Rs. 200 or Rs. 2,000 – is taxed at the same flat GST rate. Worse, the government taxes both passenger fares and platform commissions, double-hitting consumers and service providers alike.
Even more concerning: all platforms, regardless of business model or take rate (i.e., the commission they extract from each ride), are taxed identically. A platform taking 25% of a driver’s income is treated the same as one taking 10%. Fairness is irrelevant. Scale and market dominance are rewarded. That’s not a tax code – it’s a cartel subsidy.
Pakistan should introduce a tiered tax regime based on platform take rates, not just revenue. In this model, taxation becomes an ethical tool nudging the ecosystem toward fairness.
A progressive structure might look like this:
- Platforms with take rates below 11%: 0% service tax on commissions
- 11–15% take rates: 5% service tax
- Above 15%: 15%+ service tax
This wouldn’t just bring fairness to drivers – it would stimulate demand among lower-income users, expand the customer base, and generate more activity within the ecosystem. Total tax collected might even increase, but from a broader base.
This framework incentivizes platforms to leave more money with drivers, encourages fairer competition, and disincentivizes rent-seeking models. It’s not anti-business; it’s anti-exploitation.
Beyond tiered taxation, there’s a more urgent reform: removing GST on ride-hailing services altogether. GST, by design, is a consumption tax. But when applied to essential services like mobility, it becomes a consumption penalty. A 15% GST on a Rs. 500 ride means Rs. 75 in tax – a significant burden for daily commuters making minimum wage. For drivers, it translates into higher prices (and fewer rides) or lower income.
Why should the state profit from the basic movement of its citizens?
GST assumes ride-hailing is a luxury; it’s not. For a large swath of the population particularly in cities where public transport is either unreliable or unsafe, ride-hailing platforms are the only viable means of daily travel. Taxing mobility distorts priorities and penalizes participation.
inDrive’s model is built on peer-to-peer negotiation. Riders and drivers agree on fares directly, without algorithmic surge pricing or opaque markups. It’s fairness, not friction. Eliminating GST would signal that the government supports equitable access to mobility – and backs it with policy.
The mobility sector in Pakistan is still young. Platforms like inDrive offer not just convenience, but livelihood for thousands of independent drivers. Instead of being taxed into retreat, this sector should be nurtured.
By suspending GST on ride-hailing, the government would provide breathing room for the sector to grow, formalize more participants, and build a stronger long-term tax base. It would also align Pakistan with regional peers who are rethinking digital economy taxation in pursuit of inclusive growth.
And this isn’t charity. A GST holiday would increase ride volume, grow the formal driver base, and stimulate the broader gig economy. In the medium term, the government would collect more revenue – through income and fuel taxes, registration fees, and digital services growth.
This isn’t just about revenue policy. It’s about social architecture. When a single mom in Rawalpindi can afford a safe ride to work, or a student in Multan makes it to class without risking harassment on a bus – that’s policy in action.
Mobility is opportunity. It’s safety. It’s inclusion. But right now, Pakistan’s tax code treats it like it’s Netflix.
Hence, the federal budget should do more than balance the books. It should rebalance access, reward fairness, and remove structural burdens that make transportation less equitable. Pakistan’s path to fiscal stability lies not in taxing access but in creating a system where everyone has a fair chance – and then taxing based on ability, not necessity.
A budget that reflects this philosophy wouldn’t just move numbers on a spreadsheet. It would move people. And when more people can move, more people can grow. That’s the future worth striving for.
