Pakistan’s salaried class paid a staggering Rs331 billion in income taxes from July to February this fiscal year, dwarfing retailers’ Rs23 billion by 1,350%.
Despite this, the government skipped seeking IMF relief for them. The salaried class taxes jumped 56% from last year’s Rs211 billion, already exceeding the Rs75 billion target for 2024-25 by Rs120 billion with four months left.
Last year, they bore a tax burden of Rs368 billion, which was assessed on gross income without accounting for any expense adjustments. However, sources indicate that recent discussions with the IMF did not address this issue.
Dr. Najeeb Memon from the FBR promised to review the upcoming budget. Retailers, many of whom are unregistered, contributed very little in taxes, while wholesalers added Rs16 billion to the tax revenue of which half came from unregistered entities.
The Tajir Dost scheme, meant to net Rs50 billion from 10 million traders, flopped. Instead, traders passed a 2.5% tax hike to consumers.
Salaried Class Taxes vs. Failed Reforms
The FBR told the IMF traders and jewellers to resist taxation, admitting Tajir Dost’s design flaws. Large traders blocked smaller ones, stalling expansion to 43 cities. Finance Minister Muhammad Aurangzeb ordered a salaried tax review, but IMF talks skipped it.
Read: FBR Faces Rs606 Billion Shortfall and Controversy Over Senior Officer’s Transfer
Last June’s slab cuts hiked rates to 38.5% for Rs500,000 monthly earners. Non-corporate staff paid Rs141 billion (up 43%), corporate Rs101 billion (up 56%), provincial Rs57 billion (up 96%), and federal Rs34 billion (up 66%). Still, FBR’s Rs12.97 trillion target lags by Rs605 billion.
