How Pakistan can expand the tax net to include wholesale and retail traders

Wholesale and retail trade is one segment that barely pays any direct taxes and often creates the most noise whenever there is any effort to extract even a minimal amount of tax. Ammar H Khan Published June 11, 2024 Updated about 4 hours ago Listen to article Wholesale and retail trade make up 18.1 per cent of Pakistan’s Gross Domestic Product while contributing only 2pc in direct taxes. On the other hand, the industrial sector makes up 18.4pc of the GDP and contributes 40pc to total taxes, with salaried individuals contributing 15pc of the total direct taxes while making up only 2pc of the total labour force. A majority in the country pays taxes indirectly, primarily on consumption — which disproportionately affects the poor and vulnerable households more than the affluent. As the gap between the destitute and elite increases, there is a need to increase direct taxes, which would also help expand the tax net.