Buckling under the tax weight

Following the imposition of higher tax rates on Pakistan’s captive taxpayers (the salaried class), citizens now contribute Rs1.3 billion daily to the national exchequer. Totalling Rs41bn each month, annual tax collection is expected to exceed the Rs500bn mark by the end of FY25 against Rs368bn collected in FY24. While this boosts the Federal Board of Revenue’s performance and eases International Monetary Fund (IMF) pressure on the government, it raises a critical question: has this transfer of funds from households to the state truly benefitted the economy? The answer is far from clear. Higher monthly tax deductions leave salaried families with less to meet their needs, with no visible improvement in the availability of public goods and services, whether social and physical utilities or even basic government responsibility of ensuring a safe, healthy environment and hope for a better future.