Overtaxed salaried class

Tax authorities continue to rely disproportionately on salaried individuals to generate revenue for the government. In just the first five months of the current fiscal year, the salaried class contributed around Rs198 billion in income taxes, marking a staggering 57% increase compared to the same period last year. These tax contributions significantly overshadow the paltry Rs26 billion collected from audits, a drop of 16% from the previous year. This reality raises urgent questions about fairness and equity in our taxation system.

The disproportionate burden rests primarily on the shoulders of salaried employees, most of whom have little hope of negotiating salary increases that match inflation or rising tax rates. With the exception of government officials and employees, who regularly receive substantial pay increases to account for inflation, many private sector workers see stagnation in their salaries, leaving them to navigate a complex financial landscape marked by soaring costs and rising taxes. In most cases, these workers can only expect raises during periods when their employers are making healthy profits, which has not been the case for many in recent years.

Couple this with the relatively low tax rates for non-salaried individuals - supposedly to encourage them to pay something - and it is clear that the working class is being forced to subsidise the government and most private businesses without even a corresponding rise in their own wages. Meanwhile, the fall in audit revenue suggests tax authorities are doing even less to address the elephant in the room - the informal economy. Also, the government's quest to increase tax revenue through indirect taxes is another gut punch for salary earners because money earned and spent in the informal economy often avoids these taxes as well.

Coupled with the government's increasingly harsh threats to non-filers - even those who are taxed at the source and owe no additional taxes - we now live in an environment where compliance is treated as a punitive measure rather than a civic responsibility.