Salaried Class Pays More Income Tax Than Exporter, Retailers and Real Estate Sector Combined

Pakistan’s salaried workers are contributing more in income taxes than several wealthier sectors combined, highlighting structural imbalances in the country’s tax system as the government struggles to broaden its revenue base.

Data from the Federal Board of Revenue shows the salaried class paid Rs. 365 billion ($1.3 billion) in income tax during July–February of the current fiscal year, up from Rs. 332 billion a year earlier. The increase comes despite limited relief in tax slabs, highlighting the growing reliance on documented income segments.

The contribution from salaried individuals now exceeds the combined tax payments of retailers, wholesalers, exporters and real estate players, sectors long criticized for underreporting income and resisting formal documentation.

The disparity reflects a deeper structural issue in Pakistan’s tax regime, where enforcement remains weak outside the formal economy. Over the past five years, tax payments by salaried workers have surged more than fourfold, rising 412%, according to a study by economist Sajid Amin Javed.

In contrast, retailers contributed just over Rs. 16 billion in taxes during the same period, while wholesalers and distributors paid about Rs. 35 billion, the study found. The imbalance has fueled concerns about policy bias and the state’s limited ability to bring politically influential sectors into the tax net.

The State Bank of Pakistan estimates that out of roughly 5 million micro, small and medium enterprises, only about 179,000 retailers are registered under the point-of-sale system, highlighting the scale of undocumented economic activity.

Efforts to expand the tax base have shown limited progress. Officials have yet to finalize new measures to bring retailers into the net in the upcoming 2026–27 budget, despite discussions with the International Monetary Fund.

Economists say the continued reliance on salaried workers and formal businesses risks deepening perceptions of inequity in the tax system, while constraining the government’s ability to offer meaningful relief without widening the base.

Sectors such as agriculture, real estate and wholesale trade remain largely under-taxed, reflecting both political resistance and administrative challenges. While the government has moved to tax high-income pensioners earning more than 10 million rupees annually, their contribution remains marginal so far this fiscal year.

Unless authorities succeed in documenting large parts of the informal economy, analysts warn that Pakistan’s tax burden will continue to fall disproportionately on those already within the system.