New official data from the Federal Board of Revenue has ignited a fresh debate over tax equity in Pakistan, revealing that salaried individuals contributed a staggering Rs365 billion in income tax during the first eight months of the current fiscal year. This figure, covering the period from July to February, remarkably exceeds the combined tax payments made by some of the country’s most affluent sectors, including retail, wholesale, export, and real estate. The collection represents a notable increase from the Rs332 billion recorded during the same period last year, suggesting that despite minor adjustments in initial tax slabs, the financial burden on formal employees continues to intensify.
The disparity in the national tax base is further highlighted by the fact that the salaried class is currently paying three to four times more than exporters, retailers, and distributors combined. This is not a sudden spike but part of a documented five-year trend where tax collections from salaried workers grew by over 412 percent between 2019 and 2024. Research conducted by Dr. Sajid Amin Javed indicates that from 2020 to 2025, the salaried class contributed over Rs1,144 billion, while the retail sector contributed a mere Rs16.54 billion and wholesalers added only Rs35.23 billion to the national exchequer.
This imbalance is largely attributed to the immense political influence wielded by sector magnates and property tycoons, who have historically resisted documentation and formalization. While the salaried class is easily taxed through at-source deductions, large segments of the economy—specifically agriculture, real estate, and retail trade—remain significantly under-taxed. State Bank of Pakistan data confirms this lack of documentation, showing that out of approximately 5 million micro and small businesses, only 179,383 retailers have installed Point of Sale systems. This slow pace of digital integration allows a vast portion of commercial activity to remain outside the formal tax net.
Current discussions between the government and the International Monetary Fund have touched upon proposals to broaden the tax base, yet there appears to be no concrete plan to introduce a new scheme for retailers in the upcoming 2026-27 budget. Analysts argue that this reflects a persistent lack of political will to challenge powerful constituencies, resulting in a “narrowed tax base” where the burden falls disproportionately on those already within the system. While the government recently attempted to tax wealthy pensioners earning over Rs10 million annually, their initial contribution has remained marginal, failing to provide any meaningful relief to the middle-class workforce.
The ongoing reliance on the salaried segment has led to deepening perceptions of unfairness within the Pakistani fiscal system. Experts warn that without a transparent “track and trace” mechanism for undocumented sectors, the possibility of tax relief for formal employees remains non-existent. As the government prepares for the next fiscal cycle, the pressure to reform the Federal Board of Revenue’s enforcement capabilities is reaching a breaking point, with calls for a shift away from elite-driven policymaking toward a more balanced and inclusive taxation framework that captures the true wealth of the nation’s commercial sectors.
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