The salaried class in Pakistan continues to shoulder a disproportionate tax burden as the Federal Board of Revenue (FBR) reports record-breaking collections. Despite a downward revision of income slabs under the Finance Act 2025, FBR collected Rs. 138 billion from salaried taxpayers in the first quarter of fiscal year 2024–25—up sharply from Rs. 110 billion during the same period last year. From July to September, nearly Rs. 20 billion more was collected compared to the previous year, highlighting an increasing dependence on salaried individuals to achieve tax targets.
Data shows that personal income tax from salaried citizens has surged to Rs. 1,936 billion, representing 29 percent of total PIT collection—up from just 10 percent six years ago. The share rose consistently from 10 percent in 2018–19 to 29 percent in 2024–25. Meanwhile, overall FBR revenue has nearly tripled, rising from Rs. 3,829 billion in FY2018–19 to Rs. 11,744 billion in FY2024–25. Yet, the salaried class contributes only about 5 percent of total revenue, suggesting that while their payments have grown steeply, the overall tax base remains narrow and underdeveloped.
Personal income taxes, both salaried and non-salaried, now account for just 16 percent of FBR’s total collection, compared with 19 percent in FY2018–19. Experts say this signals not better compliance but growing inequity. The increase in FBR’s tax-to-GDP ratio—from 8.83 percent to 10.33 percent—stems largely from higher deductions from compliant taxpayers, not from bringing new sectors under the net.
The sharpest policy shift came with the drastic reduction of the upper-income slab. Now, incomes above Rs. 4.1 million annually are taxed at 35 percent—a rate previously reserved for those earning above Rs. 75 million. Economists note that such an extreme compression of slabs, especially during high inflation, has no parallel globally. Professionals and skilled workers are increasingly strained, with many considering migration as high taxation erodes their purchasing power and living standards.
Analysts caution that celebrating higher tax numbers without structural reform is shortsighted. The surge in revenue, they argue, reflects the “silent sacrifice” of salaried workers rather than real fiscal progress. Unless the tax net is broadened and the burden shared equitably, Pakistan risks discouraging productivity and losing its most skilled workforce. The salaried class has become the backbone of national revenue—but it now bears an unjust and unsustainable load.
