The salaried class in Pakistan has become the third-largest contributor to tax revenue for the fiscal year 2023-24, as reported by the Federal Board of Revenue (FBR) in its annual tax report. Despite economic difficulties, salaried individuals have shown an exceptional level of tax compliance, outpacing several major sectors in their contributions.
Record-Breaking Rs368 Billion in Taxes
During FY 2023-24, salaried individuals paid an unprecedented Rs368 billion in income tax, representing a remarkable 39.3% increase from the Rs264.26 billion collected in the previous fiscal year. This surge in tax contributions underscores the increasing financial strain on the salaried class amid rising inflation and elevated tax rates.
The additional Rs112 billion compared to last year can be largely attributed to new taxes introduced in the current fiscal budget. With these new measures in place, tax collection from the salaried class is anticipated to grow even more in the years ahead.
Sector-Wise Tax Rankings
In the overall sector rankings, the contracts sector maintained its status as the top taxpayer, contributing Rs496 billion—a rise of Rs106 billion from the previous year. Close behind, the bank interest and securities sector contributed Rs489 billion in taxes, reflecting an impressive 52.8% annual growth.
In contrast, the export sector contributed Rs94 billion, marking a 27.2% increase from the last fiscal year. These statistics highlight the crucial role of the salaried class in bolstering Pakistan's tax revenue, even though they are outpaced by corporate sectors.
Other Key Tax Contributions
Several other sectors also experienced notable growth in tax collections:
Profit distribution: Rs145 billion collected, reflecting a 70% increase.
Electricity bills: Rs124 billion collected, which is a 30% rise.
Property transactions: Rs104 billion from purchases and Rs95 billion from sales.
Telephone bills: Rs100 billion in taxes, showing a 14.3% increase.
Moreover, withholding taxes contributed Rs2,740 billion in collections, indicating a 36% growth compared to the previous fiscal year. This included a Rs733 billion rise over the prior period, highlighting the government's efforts to broaden its tax base.
The Growing Burden on Salaried Individuals
Despite their substantial contributions, the salaried class continues to face a heavy financial burden, struggling with rising inflation and high tax obligations. As the government seeks ways to boost revenue, the pressure on salaried taxpayers is expected to continue.
The FBR’s report underscores the crucial role of the salaried class in supporting Pakistan’s tax framework. However, there is increasing concern regarding the necessity for fair tax policies to ensure that the financial burden is shared more equitably across all sectors.