A new taxation study released during the third review of Pakistan’s $7 billion Extended Fund Facility (EFF) by the International Monetary Fund (IMF) has revealed a significant imbalance in the country’s tax system.
The report shows that Pakistan’s salaried class is paying 3.5 times more taxes than the combined contributions of exporters, retailers, wholesalers, and distributors.
The findings were presented at a roundtable organised by the Friedrich Ebert Stiftung (FES) during the launch of the report State, Society and Progressive Taxation in Pakistan, authored by economist Dr Sajid Amin Javed.
Participants at the event highlighted that Pakistan’s taxation structure has increasingly become a system of economic extraction, particularly since 2019, placing a disproportionate burden on salaried employees.
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According to the study, tax collection from the salaried class reached Rs391 billion in 2024, up sharply from Rs276 billion in 2023, marking an increase of 41.66% in just one year.
The report notes that the salaried segment alone contributed 352% more tax revenue than exporters, retailers, wholesalers, and distributors combined.
Researchers warned that this surge is not a temporary spike but reflects a systemic trend in Pakistan’s tax policy.
Over the past five years, from 2019 to 2024, tax payments by salaried individuals increased by an astonishing 412.6%, widening the tax gap between formal wage earners and other sectors of the economy.
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The report further states that this pattern of regressive direct taxation creates the impression that Pakistan is reducing its reliance on indirect taxes, even though the overall tax burden remains unevenly distributed.
Between 2020 and 2025, the salaried class paid a total of Rs1,144.94 billion in taxes, while retailers contributed only Rs16.54 billion, and wholesalers and distributors paid around Rs35.23 billion during the same period.
Experts at the roundtable stressed that Pakistan needs comprehensive tax reforms, broader documentation of the economy, and improved enforcement mechanisms to ensure a fairer tax system and sustainable fiscal policy.
