In Pakistan, the salaried class has long been at the forefront of the country’s tax base, a fact that has led to growing frustration and financial pressure. Whether working in government institutions or the private sector, employees face a significant portion of their income being deducted as income tax. This heavy burden directly reduces their net take-home pay, making it increasingly difficult to meet everyday household expenses.
The Weight of Tax on Salaried Individuals
Unlike business owners or informal sector workers who often operate outside the formal tax net, salaried individuals have no choice. Taxes are deducted at the source, leaving them with little room for adjustment or tax-saving strategies. This creates an imbalance in the system where the burden is not distributed fairly across all income groups.
The rising cost of living, including housing, utilities, education, healthcare, and transport has compounded the challenge, with many families now struggling to maintain their standard of living.
Budget 2024–25: Relief Promised, Disappointment Delivered
In the recently announced federal budget for fiscal year 2024–25, the Government of Pakistan made some adjustments aimed at reducing the tax burden on the salaried class. However, these changes fell short of expectations.
The minor relief provided was largely symbolic and did not address the core issue: the disproportionate tax load placed on middle and lower income earners. Many were hoping for meaningful tax slab adjustments or deductions that would ease monthly financial strain but those expectations remained unfulfilled.
The Untaxed Elite: A Persisting Inequity
Perhaps the most troubling aspect of Pakistan’s taxation system is the persistent exemption or under-taxation of the country’s wealthiest individuals and powerful sectors. Large landowners, influential business elites, and certain political entities continue to enjoy leniencies that are unavailable to ordinary citizens.
Despite calls from economists, civil society, and international financial institutions to broaden the tax base and bring more high-income earners into the tax net, meaningful reform has yet to be implemented. The result is an unjust system where the salaried class shoulders a disproportionate share of the national revenue.
What Needs to Change?
For Pakistan to achieve a fair and sustainable tax system, the following reforms are essential:
- Widening the Tax Net: Bring untaxed sectors, especially large landowners and informal businesses under formal taxation.
- Progressive Taxation: Adjust tax slabs to reflect the principle that higher earners should pay a larger percentage of their income.
- Transparent Use of Tax Revenue: Build public trust by showing how taxes are being used to improve infrastructure, education, healthcare, and social safety nets.
- Tax Incentives for the Middle Class: Offer deductions for dependents, education, and healthcare expenses to ease the burden on working families.
Conclusion
The current tax system in Pakistan places an unsustainable burden on salaried individuals who are already struggling with inflation and stagnant wages. Unless the government adopts a more equitable approach to taxation, discontent will grow — and so will economic disparity. A balanced, transparent, and fair tax policy is not just a matter of finance instead it is a matter of social justice.
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Tax burden, income tax Pakistan, Budget 2025, salaried class, tax reforms
