According to sources, despite a rise in brain drain, income tax paid by Pakistan’s already burdened salaried class has increased further. During the first seven months of the current fiscal year, income tax collection from salaried individuals rose by 10 percent to Rs 315 billion.
Sources say that last year, one out of every three Pakistanis who left the country belonged to the skilled or highly educated category, migrating abroad in search of better jobs and higher wages. Provisional data shows that from July to January, salaried individuals paid Rs 315 billion in income tax, compared to Rs 285 billion collected during the same period last fiscal year. This marks an increase of Rs 30 billion, or 10.5 percent. Data also indicates that income tax paid by salaried employees in the public and private sectors during this period was more than double the tax paid by the real estate sector.
Sources clarify that the Rs 315 billion figure excludes book adjustments and does not include payments made by certain contract employees under Section 153-B of the Income Tax Ordinance. Pakistan’s salaried class continues to face a disproportionate tax burden and is bearing the consequences of the government’s sluggish policies. Government claims of providing relief to salaried individuals remain largely verbal, resulting in skilled, highly skilled, and highly educated people leaving the country.
According to the Bureau of Immigration and Overseas Employment, out of 762,000 Pakistanis who left the country in the previous calendar year, 254,180 were skilled, highly skilled, or highly educated. Remittances from overseas Pakistanis are the only major factor keeping Pakistan from default, although the government does not agree that all skilled individuals are leaving the country.
Meanwhile, during a meeting of the Senate Standing Committee on Finance this week, Finance Minister Muhammad Aurangzeb stated that Pakistan earns 4 to 5 billion dollars annually from IT exports, indicating that skilled professionals are still working within the country. He added that it is often ignored that the government reduced the income tax rate for individuals earning Rs 100,000 per month from 5 percent to just 1 percent.
However, he acknowledged that due to certain conditions of the International Monetary Fund (IMF) program, tax relief for higher-income groups could not be provided. Details show that employees in the non-corporate sector paid the highest income tax amounting to Rs 139 billion, a 14 percent increase compared to last year. Corporate sector employees paid Rs 100 billion in income tax, reflecting a 16 percent increase. Provincial government employees paid Rs 44 billion, which is 8 percent lower than last year, marking the second consecutive month of decline in tax payments by provincial employees. Federal government employees paid Rs 31.5 billion in income tax, a 9 percent increase year-on-year.
During the current fiscal year, the government introduced several measures to expand the tax base, but later withdrew them due to external pressure. Sources say that FBR Chairman Rashid Langrial assured the Senate committee that he would disclose the names of influential individuals obstructing enforcement actions, though this disclosure will be made in a closed-door session without media presence.
In the first seven months of the current fiscal year, a total of Rs 152 billion in withholding tax was collected from the real estate sector, showing an increase of 17 percent.
