Pakistan’s tax system continues to rely heavily on salaried individuals, once again highlighting deep structural imbalances in revenue collection. Recent figures released by the Federal Board of Revenue (FBR) show that salaried taxpayers contributed an impressive Rs266 billion in income tax during the first half of the current fiscal year — a figure that far exceeds contributions from several other major sectors of the economy.
Between July and December, taxes paid by salaried employees accounted for nearly one-tenth of the country’s total income tax revenue. More strikingly, their contribution was more than twice that of the real estate sector, despite real estate being one of the most profitable and asset-rich segments of the economy.
Compared to the same period last year, income tax collected from salaried individuals increased by 9%, reflecting consistent growth even in a challenging economic environment. Officials note that once accounting adjustments are included, the actual contribution from salaried taxpayers has already crossed Rs300 billion. These numbers do not even include taxes paid by certain contractual employees, suggesting the real contribution may be even higher.
A Disproportionate Load on Salaried Workers
Tax experts argue that the salaried class bears an unfair share of the tax burden. On average, salaried individuals in Pakistan pay close to 38% of their gross income in taxes — a rate significantly higher than what is seen in many neighboring countries. Unlike other sectors, salaried employees have little room for tax avoidance, as their taxes are deducted at source.
Within this group, non-corporate employees contributed the largest share, followed by corporate sector workers. Federal government employees showed a modest increase in tax payments, while contributions from provincial government employees declined compared to last year.
Revenue Targets Still Out of Reach
Overall income tax collection during the first half of the fiscal year stood at Rs3.03 trillion. However, this growth remains insufficient for the FBR to meet its revised annual target of Rs6.5 trillion. With less than 10% growth recorded so far, the pace of collection needs to accelerate significantly in the remaining months.
This shortfall has renewed concerns about the government’s continued dependence on already documented taxpayers rather than expanding the tax base.
Real Estate: High Value, Low Contribution
In contrast, tax collection from the real estate sector remains relatively modest. While withholding taxes from property transactions rose to Rs126 billion — showing a year-on-year increase — the sector’s overall contribution is still considered low given its scale. Taxes collected on property sales increased sharply, but taxes on property purchases declined following tax rate reductions announced in the latest budget.
The Way Forward
Despite the growing contribution of salaried individuals, discussions are underway to penalize those who fail to file tax returns. Critics argue that such measures may further discourage compliance among honest taxpayers unless accompanied by serious reforms aimed at bringing undocumented sectors into the tax net.
Conclusion
The latest data reinforces a long-standing reality: Pakistan’s revenue system relies disproportionately on salaried workers because they are easy to tax, not because they are the most capable of paying. Without meaningful steps to document and fairly tax sectors like real estate, retail, and the informal economy, the burden on salaried individuals will continue to rise — potentially undermining trust in the tax system and slowing economic progress.