The salaried class in Pakistan paid Rs. 375 billion in taxes last year. This figure is expected to rise to Rs. 450 billion this year, according to recent data. The salaried individuals continue to be the largest contributors to the national tax pool.
In stark contrast, the retail sector’s tax contributions are significantly lower. Only 8.7% of the 3.1 million registered retailers filed their tax returns. Their total tax contribution amounted to just Rs. 34 billion. This low compliance rate has raised concerns about tax evasion and the need for better enforcement in the retail sector.
Large landowners have also contributed minimally. They paid a mere Rs. 2 billion in Agriculture Income Tax last year. This small amount, despite the vast agricultural income potential in the country, highlights the inefficiencies in the taxation of this sector.
The disparity in tax contributions between the salaried class, retailers, and landowners has sparked discussions about tax equity in Pakistan. The salaried individuals, whose taxes are deducted at the source, bear a significant portion of the tax burden. Meanwhile, retailers and large landowners contribute relatively little.
This situation underscores the need for comprehensive tax reforms. The government faces mounting pressure to broaden the tax base and ensure that all sectors contribute their fair share. Improved enforcement and policy measures could help address these imbalances.
As tax collection efforts continue, the government is expected to focus on increasing compliance among retailers and large landowners. The goal is to create a more equitable tax system that lessens the burden on the salaried class and ensures fair contributions from all sectors of the economy.
