By Moazzam M Malik

Pakistan’s economy has long depended on a narrow tax base, with a limited segment of society bearing the overwhelming burden of taxation. Among all sectors, the salaried class has emerged as the most heavily taxed and most transparently monitored segment of society. Salaried individuals pay taxes directly from their monthly income deductions, while a large portion of the informal economy remains either under-taxed or completely outside the tax net.

In an era of rising inflation, soaring electricity bills, increasing fuel prices, depreciating currency, and growing unemployment, the salaried class is struggling to survive. At the same time, countless sectors continue business activities without contributing proportionately to the national exchequer. This imbalance has created frustration, economic inequality, and a widening trust deficit between taxpayers and state institutions.

Pakistan urgently needs a fair, transparent, and technology-based taxation system that broadens the tax net while reducing pressure on honest taxpayers.

The salaried class in Pakistan pays income tax directly through salary deductions. Unlike many other sectors, these individuals cannot hide their income, manipulate accounts, or evade taxation. Every month, taxes are automatically deducted before salaries are received.

A middle-class employee today faces:

  • Income tax deductions
  • Rising utility bills
  • Inflation in food items
  • Expensive education
  • Increasing medical costs
  • Fuel expenses
  • Rent and transportation burdens

Despite these pressures, the salaried class continues contributing regularly to the economy and the national treasury.

Ironically, many highly profitable sectors either pay minimal taxes or remain undocumented.

Apart from salary tax, salaried individuals also pay numerous indirect taxes daily, including:

  • General Sales Tax (GST)
  • Petroleum levy
  • Electricity duty
  • Gas surcharges
  • Mobile phone taxes
  • Internet taxes
  • Withholding taxes on banking transactions
  • Taxes on vehicles and registration
  • Toll taxes
  • Property-related taxes

Thus, the salary class suffers double taxation:

first through direct salary deductions and then through indirect consumption taxes.

The painful reality is that a salaried person often contributes more to the national treasury than many large, undocumented businesses.

Pakistan’s tax structure relies heavily on easily traceable income sources rather than on expanding the tax net fairly. As a result:

  • Honest taxpayers are punished repeatedly
  • Tax evaders remain comfortable
  • Corruption opportunities increase
  • Informal cash economy expands
  • Public trust in tax institutions declines

The solution is not to overburden existing taxpayers but to include all earning segments into a simple, low-rate, corruption-free taxation framework.

Pakistan’s economic survival depends on documenting all sectors of the economy. Instead of imposing heavy taxes, the government should introduce nominal, easy, and digitally collected taxes from every earning segment.

The principle should be low tax, broad tax base, simple collection, and zero harassment.

Street vendors, hawkers, pushcart owners, and small roadside sellers are part of Pakistan’s informal economy. These people work tirelessly to feed their families and should not be treated as criminals.

A very small fixed tax may be deposited daily through:

  • Mobile banking apps
  • FinTech apps
  • NADRA-linked digital wallets
  • Banking agents

The payment should be linked with the individual’s CNIC number. Once a vendor pays the nominal tax digitally, they should receive official legal protection to continue business peacefully.

This approach would:

  • Increase tax collection
  • Reduce corruption
  • Document the informal economy
  • Build trust between citizens and the state

Small shopkeepers form the backbone of Pakistan’s local economy. However, many remain outside the formal tax system due to fear of complicated procedures and corrupt practices.

The government should introduce a transparent daily micro-tax system to eliminate complicated paperwork and reduce dependence on middlemen.

A citizen-friendly taxation environment encourages voluntary participation far more effectively than fear-based systems.

Large businesses and industrialists serve as the backbone of economic development, driving investment, generating employment opportunities, strengthening exports, and contributing significantly to national prosperity. However, distrust between taxpayers and tax authorities often leads to concealment, legal disputes, and underreporting.

The state should also create a business-friendly tax environment based on simplicity, transparency and stability. Complicated tax laws create confusion and opportunities for corruption. Pakistan needs fewer, clearer and stable tax regulations.

Businesses should be encouraged to submit taxes voluntarily through modern digital systems with minimum human interaction. Honest taxpayers must not face repeated harassment, unnecessary notices, or coercive tactics.

At the same time, the salaried class urgently needs economic relief to survive inflationary pressures. The government should significantly raise the tax exemption threshold so that middle-income earners can manage basic household expenses.

Tax rates on salaries should be lower than those on luxury or speculative income sources because salaried persons already contribute consistently and transparently.

Tax slabs should automatically adjust annually according to inflation rates so that rising salaries do not result in unfair higher taxation without actual improvement in purchasing power.

Tax relief should be given on:

  • Children’s education
  • Medical expenses
  • House rent
  • Utility bills
  • Insurance contributions

Such deductions would support middle-class survival.

These hidden taxes disproportionately affect ordinary citizens.

Pakistan can also transform its economy through technology-driven taxation. Digital systems can:

  • Reduce corruption
  • Increase transparency
  • Improve tax compliance
  • Minimize human interference
  • Expand documentation
  • Strengthen national revenue

Countries progressing economically have succeeded not merely through high taxation but through fair and efficient taxation systems. No taxation system can succeed without public trust.

Pakistan’s economic future depends upon justice, documentation, transparency, and inclusion. The burden on the salaried class has reached alarming levels, while large portions of the economy remain under-taxed or undocumented.

The solution is not increasing taxes on existing taxpayers but widening the tax net through simple, nominal, technology-driven, and corruption-free systems.

Hawkers, cart owners, small traders, businesses, and industrialists should all become part of a fair national taxation framework without fear, exploitation, or harassment.

Simultaneously, the salaried class deserves immediate relief in recognition of its honesty and continuous contribution to the national economy.

A thriving Pakistan is achievable only when our taxation system is fair, transparent, and efficient, ensuring that every citizen contributes their rightful share. Only then can the nation move toward economic stability, social justice and sustainable development.

The author is a Lahore-based academic.