ISLAMABAD: If official figures are to be believed, out of Pakistan’s 1.7 million taxpayers, around 1.6 million taxpayers pay about Rs21,000 each as income tax every year.
All of these people fall into the lowest tax bracket where their annual income tax is less than Rs500,000.
Even more interesting is the fact that this particular tax bracket has not gained many new entrants over the past three years; to be exact, statistics show that 1.663 million taxpayers paid less than Rs500,000 as income tax in 2008. This number went down to 1.478 million in 2009 and then back to 1.662 million in the tax year 2010.
Clearly, over the past three years not many new taxpayers have stood up and been counted by the FBR.
This is not the only staggering statistic compiled by the Federal Board of Revenue; less than 20,000 people in Pakistan earned enough to pay between Rs1 million and Rs5 million (10 lakhs to 50 lakhs) as their annual income tax in 2010, while 21, 077 taxpayers have paid annual income tax in the range of Rs0.5 million to Rs1 million (five to 10 lakhs) and earned the state exchequer a little over Rs13.5 billion.
This means that each of these 21,077 people paid an annual income tax of around Rs650,000. And this was the income tax bracket with the second highest number of taxpayers.
No wonder Pakistan is known for its low compliance level to income tax rules and international donors want the country to widen its tax base before asking the rest of the world for more aid and help.
Only 7,680 taxpayers earned enough to pay income tax in the range of Rs1 million to Rs1.5 million (10 to 15 lakhs). With a total collection of over Rs8 billion, each of these taxpayers contributed a mere Rs1.52 million to the government exchequer in the year.
Around 3,000 taxpayers paid income tax between Rs1.5 million and Rs2 million (15 to 20 lakhs) a year while 2,414 taxpayers paid tax in the range of Rs2 million to Rs2.5 million (20 t0 25 lakhs).
For the next tax bracket, the number of taxpayers dropped steeply. Only 1,526 people paid tax in the range of Rs2.5 million to Rs3 million (25 to 30 lakhs) followed by 838 taxpayers who paid Rs3.5 million to Rs4 million (35 to 40 lakhs) as annual tax in 2010.
The number reduces to a mere 602 when it comes to people who paid more than Rs4 million to Rs4.5 million (40 to 45 lakhs) as annual tax. And only 526 taxpayers paid up to Rs5 million (50 lakhs). Each of them contributed Rs4.5 million (45 lakhs) to the government; this is less than the amount that one would need to purchase a Prado Land Cruiser.
Also, there are only 4,426 taxpayers across Pakistan who declared income tax to be more than Rs5 million. However, FBR officials point out that this bracket includes corporate and other businesses.
Although the number of these taxpayers was low, their contribution in the total income collection stood at Rs286.023 billion during 2010 out of the total collection of Rs373.685 billion from 1.706 taxpayers.
In other words, income tax collection from Pakistan’s 1.6 million taxpayers remained Rs87.662 billion.
A senior tax official told Dawn that the introduction of universal self-assessment scheme (USAS), a scheme to allow taxpayers to determine their tax themselves without being questioned by the tax officials and in the absence of income tax audits, is among the reasons for the low level of tax payment in the country.