In parliament, Pakistan’s Minister of State for Economic Affairs, Hina Rabbani Khar, has disclosed that the percentage of the country’s population paying direct taxes was extremely small, and largely restricted to people receiving salaries.
Only 2.5m people currently pay direct taxes in Pakistan, she reported. That would represent 2.6% of the country’s population of working age. Furthermore, the majority (1.8m) of those direct taxpayers are salaried employees.
She confirmed that more indirect taxes were collected in Pakistan than direct taxes. In fact, it was confirmed in the budget last month, that Pakistan’s experience in the 2008/09 fiscal year was that direct taxes represented only 39% of overall tax revenues, and that shortfalls in actual as against budgeted direct tax collection (some 7% in 2008/09) went some way to explain the necessity for increased foreign loans and grants during the year.
She went on to confirm that the government had a three-year plan to move the emphasis in the taxation system from indirect to direct taxes, to broaden Pakistan’s tax base and to expand revenues to those sectors of the economy which are presently untaxed. She indicated that tax collections at the moment represented only 9.6% of the country’s GDP.
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