Income tax payments by Pakistan’s salaried class increased sharply during the first seven months of the current fiscal year, adding more pressure on a group that already faces one of the highest tax burdens in the country.
According to provisional figures from the Federal Board of Revenue (FBR), salaried individuals paid Rs. 315 billion in income tax from July to January, compared to Rs. 285 billion in the same period last year. This shows an increase of Rs. 30 billion, or more than 10 percent.
Despite being a small portion of the population, salaried employees continue to contribute far more tax than several other sectors. The amount paid by public and private sector employees was more than double the tax collected from the real estate sector during the same period. The figures do not include certain contractual payments and book adjustments.
Experts say the government is relying heavily on the salaried class instead of expanding the tax net. On average, salaried workers pay nearly 38 percent of their income in taxes, which is higher than in many countries in the region and far more than what is paid by sectors such as retail and real estate.
At the same time, Pakistan is facing a growing brain drain. Official data shows that more than 762,000 Pakistanis left the country last year. Among them, over 254,000 were skilled, highly skilled, or highly qualified professionals. This included thousands of doctors, chartered accountants, engineers, and IT experts.
Analysts warn that while remittances from overseas Pakistanis are helping stabilize the economy, exports have dropped by 7 percent and foreign direct investment has fallen sharply. They fear that continued pressure on salaried professionals could weaken the country’s long-term economic growth.
The government, however, denies that skilled workers are leaving in large numbers. Finance Minister Muhammad Aurangzeb recently said Pakistan earns billions of dollars from IT exports, suggesting many professionals are still working locally. He also pointed out that income tax on low earners was reduced, but admitted there was limited room to provide relief to higher-income groups due to IMF conditions.
Data shows non-corporate employees paid the highest share of salaried tax, followed by corporate sector workers. Tax contributions from provincial government employees declined slightly, while payments from federal employees increased.
Meanwhile, a new tax on wealthy pensioners generated very little revenue, highlighting its limited impact. Efforts to broaden the tax base have also struggled, with several enforcement measures rolled back.
The real estate sector paid Rs. 152 billion in withholding taxes during the same period, showing an increase from last year but still far less than what the salaried class contributed.
The rising tax burden on salaried individuals, combined with limited reforms and growing professional migration, continues to raise concerns about fairness and sustainability in Pakistan’s tax system.
