Salaried class pays 352% more tax than other sectors: study

• Rs391bn paid by salaried class.
• Five-year burden rose 412.6%.
• Study questions fairness of taxation.

ISLAMABAD: As the International Monetary Fund (IMF) conducts the third review of Pakistan’s $7 billion Extended Fund Facility (EFF), a new taxation study has found that the salaried class paid 3.5 times more in taxes, or 352% more, than the combined contribution of exporters, retailers, wholesalers and distributors, The News reported.

Speaking at a roundtable organised by Germany’s Friedrich Ebert Stiftung (FES) on Thursday for the launch of State, Society and Progressive Taxation in Pakistan, authored by Dr Sajid Amin Javed, participants described taxation as a form of extraction that has become particularly stark since 2019.

Tax collection from the salaried class stood at Rs391 billion in 2024 from Rs276 billion in 2023, a staggering growth of 41.66%. The salaried class alone paid 352% higher tax revenue than exporters, retailers, wholesalers and distributors combined.

Alarmingly, the study states, it is not a one-time random rise and denotes a systemic extraction. Tax collections from the salaried class grew by 412.6% in the last five years, 2019 to 2024, widening the gap further. This regressive direct taxation created an illusion that the share of indirect taxes is reducing and the system is improving.

During the last five years (2020-25), the total tax paid by the salaried class was Rs1,144.94 billion, whereas the contribution from retailers was around Rs16.54 billion, and the share of wholesalers and distributors was Rs35.23 billion.