Record Rs130 Billion Collected from Salaried Individuals
Pakistan’s salaried class has achieved a record milestone by contributing Rs130 billion in taxes during the first quarter (July–September) of the fiscal year 2025–26, according to fresh data released by the Federal Board of Revenue (FBR). The figure marks a substantial rise from Rs110 billion recorded in the same period last year, reflecting both improved compliance and increased income tax collection efficiency.
This surge in tax collection highlights the growing dependence of the government on formal-sector employees to generate direct revenue. Despite marginal reductions in income tax rates under the 2025–26 budget, salaried individuals continue to bear the heaviest tax burden among all economic groups.
Salaried Class Outpaces Business and Export Sectors
Official data shows that the salaried segment alone contributed almost double the combined tax payments of exporters, wholesalers, and retailers during the first quarter. This imbalance underscores Pakistan’s longstanding challenge of broadening its tax base, as the informal and business sectors remain under-taxed compared to formally employed citizens.
Analysts note that while automation and withholding systems have improved tax collection from salaries, the self-employed and retail sectors continue to operate largely outside the documented economy. The contrast has reignited debate about fairness and equity within Pakistan’s taxation framework.
Structural Imbalance in the Tax System
Experts argue that the heavy reliance on the salaried class reflects deep-rooted structural flaws in the country’s taxation model. While millions of wage earners are taxed at the source, a large portion of potential taxpayers in trade, agriculture, and services often evade or underreport income.
Economists have emphasized the need for comprehensive reforms to ensure that all income groups contribute proportionately. Without such changes, the tax-to-GDP ratio may remain stagnant, forcing the government to depend on easier-to-collect sources such as salary deductions.
Government’s Focus on Expanding Tax Net
In recent months, the FBR has launched several initiatives aimed at widening the tax net, including the use of digital databases to track untaxed income and property ownership. The government also aims to integrate data from provincial authorities to identify high-income individuals not currently registered with the FBR.
However, progress has been slow due to administrative challenges, political pressures, and limited capacity to enforce tax compliance among powerful sectors. As a result, salaried employees remain the most transparent and compliant group within Pakistan’s taxpayer base.
Economic Implications of Rising Tax Burden
The record Rs130 billion contribution from the salaried class demonstrates both the effectiveness of Pakistan’s withholding tax system and the limited scope of revenue diversification. While the figure boosts government finances in the short term, experts warn that continued over-reliance on formal-sector employees could discourage savings and reduce disposable income, impacting overall consumption and growth.
As fiscal pressures mount and external financing remains uncertain, policymakers face the dual challenge of maintaining tax revenue while ensuring equity and sustainability in the system.
