Pakistan’s tax mix is becoming more lopsided under the IMF programme, with salaried workers now contributing Rs629 billion after two years while real estate, agriculture and retail remain largely outside the tax net.
Pakistan tax burden shifts to salaried workers
That gap matters because it undercuts the IMF’s own reform message: Pakistan cannot keep squeezing formal wage earners and still expect durable compliance, higher investment and broader growth. The Fund’s regional director, Jihad Azour, said a fairer and more neutral tax structure is needed to encourage compliance and allow productive firms to expand, but the numbers show the opposite dynamic is still taking hold.
The salaried class had paid Rs391 billion annually before the IMF programme began, meaning its contribution has surged by about Rs238 billion in just two fiscal years. By contrast, retailers have barely entered the system, with only 137 new retailers joining by Oct. 15 against a target of 1 million, while the agriculture sector’s tax take remained minimal at Rs5.1 billion in Punjab and Sindh combined as of June.
Real estate has also seen lighter taxation even after policy changes. Federal Board of Revenue data show real estate income tax fell 38% to Rs35.2 billion in the first three months of the current fiscal year after the government cut rates by 50%, with the IMF’s backing. The sector had contributed Rs200 billion in FY24 and Rs236 billion in the last fiscal year, but collections may now fall below Rs150 billion.
For investors, the story is not just about fairness but about policy credibility. A tax system that leans on employees while granting relief to politically influential sectors points to weak reform execution, higher informality and a narrower base for future revenue growth, all of which complicate Pakistan’s fiscal math and its ability to support public investment without fresh pressure on households and formal businesses.
Azour said Pakistan has made progress on macro stability, external buffers and confidence, but warned that the next step is turning stabilisation into stronger, more durable growth. That will depend on whether Islamabad can move from ad hoc relief and loopholes toward a medium-term tax strategy that broadens the base, improves neutrality and delivers reforms that are actually enforced.
| Entity | Gains | Losses |
|---|---|---|
| Salaried taxpayers | ▲More formal role in revenue base | ▼Higher tax burden |
| Retailers, realty, agriculture | ▲Lower immediate tax pressure | ▼Continued informality risk |
| Pakistan government | ▲Short-term revenue stability | ▼Reform credibility |
| IMF programme | ▲Stabilisation progress | ▼Broader-tax-base goal stalls |
