ISLAMABAD: In the first eight months (July-February) of the current fiscal year, salaried individuals have contributed Rs365 billion in income tax — an amount exceeding the combined payments made by affluent sectors such as retailers, wholesalers, exporters and real estate magnates.
According to the official data of the Federal Board of Revenue (FBR), the salaried class coughed up Rs365 billion in the first eight months of the current fiscal year against Rs332 billion in the same period of the last fiscal year.
Despite the claim that the salaried class had got meager reduction in the initial slabs, the actual collection increased in the first eight months of the current fiscal year.
On the other hand, the government so far has no plan to introduce any new scheme for retailers to bring them into the tax net from the 2026-27 budget.
In the latest discussions with the IMF, some proposals came under discussions but nothing firmed up related to retailers for the next budget.
If the FBR fails in broadening the narrowed tax base, there’s no possibility of relief for the salaried class, which alone paid three to four times more than exporters, retailers, wholesalers, and distributors combined.
It is not a one-time random rise. Tax collections from the salaried class quadrupled, grew 412.6% in the last five years, 2019 to 2024, widening the gap further.
A recent study by Dr Sajid Amin Javed shows that in the last five years (2020 to 2025), the total tax paid by the salaried class was Rs1144.94 billion, whereas the contribution from retailers was around Rs16.54 billion, and the share of wholesalers and distributors was Rs35.23 billion. This is a pure case of elite-driven policymaking on the one hand and the inability of the taxation system to track and trace those who do not pay taxes on the other.
According to the State Bank of Pakistan (SBP), out of 5 million micro, small, and medium businesses, only 179,383 retailers have installed point of sale (POS) as against around 151,646 in FY2024.
These groups, especially retailers, wholesalers, and property tycoons, which wield significant political influence, have consistently resisted documentation and formalisation, and successive governments have lacked the political will to bring them fully into the tax net.
Resultantly, the burden of taxation falls disproportionately on salaried individuals and formal businesses, who are already within the tax system and are easier to tax.
Dr Sajid Amin Javed stated that agriculture, real estate, and wholesale and retail trade serve as illustrative case studies. Until recently, large segments of these sectors, particularly agricultural traders and real estate market, remained outside the formal tax net. Different political parties, seeking to appease their core constituencies, shielded these sectors from taxation.
Meanwhile, the tax burden has increasingly fallen on salaried workers and other easily taxed groups, deepening perceptions of unfairness in the system.
The government had brought wealthy pensioners earning over Rs10 million per annum into the tax net, but their contribution remained meager in the first eight months of the current fiscal year.
