Taxes Burden the Poor More Heavily.
Saad khan 
Islamabad: Economist Dr. Kaiser Bengali has highlighted that low-income individuals in Pakistan are paying more in taxes than those in higher income brackets. He pointed out that the share of indirect taxes has surged to 85%, despite the government's claims of reducing their ratio to 59–60%.
Speaking at a workshop titled “Budget Reporting” at the Karachi Press Club on Tuesday, Bengali noted, “A study found that the top 10% of rich people pay Rs19 in taxes out of every Rs100 spent, while the bottom 10% of poor people pay Rs22 in taxes out of every Rs100 spent.” He described the tax system as highly unjustified.
Bengali explained that the share of indirect taxes, including the withholding tax (WHT), disproportionately burdens low-income groups. Although theoretically a direct tax, the WHT effectively functions as an indirect tax due to the current system, where businesses and households pay it in advance. Many taxpayers discover later they are not liable and can claim a refund, but the lack of an effective refund mechanism means this tax often gets incorporated into the cost of production, impacting the poor more severely.
He also pointed out that finance ministers frequently increase taxes on essential goods like wheat flour, cooking oil, and sugar, ensuring higher revenue collection since these are items no one can afford to reduce consumption of. This approach places a heavier burden on the poor, who spend a larger proportion of their income on these necessities compared to the rich.
Bengali criticized the lack of government spending on the betterment of low-income people despite high tax rates. He emphasized the need for savings and pointed out inefficiencies in the government structure, such as 40 divisions in Islamabad, including many transferred to provinces under the 18th Amendment. These divisions encompass 70 departments, many of which are redundant and could be shut down to save Rs30–35 billion annually.
While praising the Benazir Income Support Programme (BISP) for its integrity, he criticized the addition of three new departments under its umbrella, which consume Rs5 billion unnecessarily. He also lamented the lack of low-cost housing schemes since 1977, forcing people to pay high rents and live in congested conditions, with up to 20 people sharing a single room in some cases in Karachi.
Bengali noted that the government is delaying the presentation of the next year’s budget due to financial constraints. He mentioned that the International Monetary Fund (IMF) has prohibited Pakistan from using a new loan to repay Chinese debt, prompting Prime Minister Shehbaz Sharif to seek a rescheduling or new loan from Beijing.
