A senior official of the Federal Board of Revenue seems to have seen it fit to respond directly to public criticism of rising income tax rates in the country.
And she thought that the best way to do that was to go on Twitter/X and basically troll those voices who are trying to speak for the rising burden of the salaried class.
And what did the senior FBR official do? She thought it a good idea to basically tell all those whose income tax is cut at source, the salaried class, that their contribution to federal tax collection was a minuscule 4.3%. So was she trying to tell them that there’s still scope for them to pay more income tax, the highest slab is 35%, which means that over a third of one’s income is cut in tax right away? Or that they shouldn’t complain since their contribution to total tax collection isn’t that much?
It’s very unclear what the objective of this ‘intervention’ on social media was but one thing is clear: it made for terrible optics and showed a complete lack of sympathy, in fact disdain, for the plight of the salaried class which rightly feels that while many people in Pakistan continue to evade taxes and while the tax net remains narrow and leaves out large profiteering segments of the economy, their tax burden keeps increasing every year.
In fact, apart from income tax, all citizens who consume goods and services, whether they pay income tax or not, pay indirect taxes, usually in the form of GST, federal excise duty, withholding tax, customs duties, surcharges on electricity and fuel, and various other levies.
Instead of unwisely trolling salaried taxpayers on social media (whose income tax is cut before they are even given their monthly salary), FBR officials should concentrate on doing their job better
Furthermore, the FBR official seems to have ironically missed the fact that the contribution to the federal tax pool from direct income taxes is relatively a smaller percentage precisely because the organisation that she works for has been unable to widen the income tax net. Since the tax net is very small, the average tax paid annually by those who are in the tax net will be relatively high and rising in recent years.
The metric quoted by the FBR official would be of little or no interest to the salaried taxpayer since he or she is not going to be concerned about how much income taxes contribute to federal tax revenues. But he or she will surely be concerned about the percentage of their income that goes away in taxes every year, and that is precisely the metric which has continued to rise year after year.
A more pertinent analysis would be to compare the income tax paid by the salaried taxpayer with that paid by retailers and wholesalers. And a recent article in The News by Mehtab Haider revealed that the tax paid by the salaried class is more than twice that paid by wholesalers and retailers. That in itself is quite telling because it goes to suggest that the FBR has not been all that successful in getting retailers and wholesalers to pay their fair share of tax.
So, instead of unwisely trolling salaried taxpayers on social media (whose income tax is cut before they are even given their monthly salary), FBR officials should concentrate on doing their job better. This includes widening the tax net, including segments/sectors of the economy that are profit-making but continue to remain outside the documented taxed sector, like agriculture, and extending the tax net to individuals who have been evading taxes.
At a higher level, the finance ministry needs to ensure that such social media interventions do not happen again. Not only do they make for bad optics, but they achieve nothing constructive and only reinforce the public perception that the federal government doesn’t really care too much for the plight of the salaried class, which is precisely why their tax burden keeps on rising.