Overburdened with taxes

Listen to article

The federal government's push to achieve macroeconomic stability continues to take its toll on the salaried class thanks to an unfair distribution of the tax burden across different segments of society and various sectors of the economy.

According to the available data, the taxmen have collected a staggering Rs331 billion worth of income tax from the salaried class in the first eight months of the ongoing fiscal year. In contrast, the retailers, most of whom are unregistered, contributed a mere Rs23 billion in the same period in terms of withholding income tax. Thus, the salaried individuals contributed 1,350% more in taxes than the retailers, even though there is no dearth of retailers who are making much more than those in the highest monthly wage bracket.

While the amount of income tax paid by exporters so far this year is not known, the figures for the previous fiscal year show that they paid a meagre Rs93.5 billion in taxes on an income of $30.6 billion, as against Rs368 billion contributed by salaried individuals in the same period. This means that this affluent segment of society contributed only a quarter of what the white-collar salaried workforce did.

Still, the tax contribution from salaried individuals – which is far higher than should be due and far bigger than their capacity – is not enough for the rulers to seek relief for them from the IMF. A case in point is the rejection by the global lender of what was going to be a Pakistan Day gift to the nation in the form of a substantial Rs8 per unit cut in the power tariff. Before that an expected Rs14 per litre drop in the petrol price was held back too.

But the poor salaried class continues to pay the price of being the only source of guaranteed revenues for the FBR. This speaks of the incompetence, inability and complicity of the tax collectors as regards extracting the due amount of tax from the big fish – even though they were only recently given a Rs32.5 billion package of incentives by the government meant to act as performance booster. And their performance is there for all to see!