Pakistan · Story

Pakistan taxed wealth for 40 years, then a general scrapped it and a one-year levy fell

The Wealth Tax Act of 1963 was repealed in 2003, a 0.5% levy on declared assets lasted one budget in 2013, and today farmers pay almost no tax while salaried workers carry the load. Parties, economists and campaigners now ask for 1% above Rs 100 million.

Pakistan already knows how to tax wealth. It did so for 40 years, until a military ruler scrapped the tax in 2003.^[1] A civilian government brought a levy back in 2013 and dropped it the next year.^[2]^[3] Today salaried workers pay in income tax many times what farmers do, and parties across the spectrum ask for a revival.^[4]^[6]^[7] All sums below are in Pakistani rupees (Rs).

Why Pakistan needs it

Start with who pays. The Salaried Class Alliance told a press conference in May 2025, citing figures from the tax authority, that salaried workers paid Rs 430 billion in income tax in the first ten months of 2024-25, on course for over Rs 550 billion for the year. Exporters and retailers together paid about Rs 100 billion. Salaried income tax was Rs 75 billion in 2018-19 and Rs 368 billion in 2023-24.^[6] Wages are taxed at source, so nobody can move them offshore or hide them in a field.

Now look at land. Agriculture is 24% of Pakistan's economy, about Rs 22 trillion. The tax collected on farm income is under Rs 4 billion, less than 0.01% of GDP, and there are about 10.3 million farms.^[7] A paper circulated in 2026 puts collection at Rs 5.6 billion against a declared potential of more than Rs 800 billion.^[4] The Finance Act of 1977 tried to tax the income of large absentee landlords, and the author of one Dawn essay records that a military government blocked it.^[1]

The state has also shrunk. A tax lawyer writing in Dawn in 2011 gave tax revenue as 13% of GDP in 1995-96 and 8.9% in 2009-10, against an international standard of 17%.^[1] A tax on net wealth reaches what an income tax misses: land, plots, jewellery, shares and cash held by people whose declared income is small.

The Wealth Tax Act, 1963

The Wealth Tax Act of 1963 put a yearly progressive tax on individuals' net wealth.^[1] We did not find an opened copy of its schedule, so this page gives no rates for it. The Finance Act 2003, under Pervez Musharraf, repealed it, along with a set of other progressive taxes the same essay lists as dropped under military rule: estate duty, gift tax and capital gains tax.^[1]

The essay's author, a tax bar official in Larkana, argued that the repeal was made "despite tremendous revenue losses", and that the law suited a country where large assets are built without declared income.^[1]

The 2013 levy that fell on the wrong people

Finance Minister Ishaq Dar announced the new budget on 13 June 2013. Dawn's report said: "Wealth tax has been revived."^[2] The law was the Income Support Levy Act 2013, passed through the Finance Act. It charged 0.5% a year on net movable assets above Rs 1 million, and the proceeds went to an income support fund for distressed households.^[3] The Finance Act 2014 repealed it.^[3]

The Sindh High Court looked at the levy in July 2020, in a case with over 500 petitions, and found a flaw that explains why it was easy to drop. The levy fell only on existing taxpayers who file wealth statements with their income tax returns. People with more movable wealth who did not file were left out. The court held that this was discriminatory.^[3] Filers paid and hidden fortunes did not. Taxing only declared assets, and only movable ones, with a threshold of Rs 1 million, made a tax that caught the people already in the net and spared the people the tax was for. We found no published figure for its yield.

What the repeals cost

The 2011 essay called the losses from the 2003 repeal "tremendous" but gave no figure, and we found none we could open.^[1] What can be seen is how Pakistan has raised money since. In 2010 the MQM offered the government a wealth tax on big feudals and landlords, plus an agricultural tax, in place of a higher general sales tax.^[9] In June 2013 Dar raised the sales tax from 16% to 17% in the same budget that revived the levy, expecting over Rs 50 billion from it.^[2]

At a Karachi forum after the 2019-20 budget, Akbar Zaidi asked whether the government was talking of a wealth tax and a property tax or of "taxing the poor and salaried classes".^[13]

Who backs a revival

The backing is broad, and it includes people who held the finance ministry. Ishaq Dar enacted the 2013 levy. Asad Umar, as incoming finance minister in August 2018, said tax cuts on energy and farming would be offset by "introducing a wealth tax", and in April 2019 he backed a wealth tax and an inheritance tax at a pre-budget forum.^[8]^[11]

Economists and tax lawyers have kept the case alive: Kaiser Bengali, Akbar Zaidi, Pervez Tahir, Huzaima Bukhari and Ikramul Haq. Tahir told the Human Rights Commission's Asma Jahangir lecture in February 2023 that wealth tax, inheritance tax and estate duties need to be re-imposed, and that large landholders should pay normal income tax.^[10] Among parties, the MQM and Farooq Sattar proposed the tax in 2010, the Haqooq-e-Khalq Party's Farooq Tariq argues for it, and Jamaat-e-Islami under Hafiz Naeem ur Rehman put a 1% wealth tax into its 2026 package. Oxfam in Pakistan, the Pakistan Kissan Rabita Committee and SAAPE campaign for it.

The Jamaat-e-Islami package replaces a petroleum levy worth about Rs 1.45 to 1.50 trillion with a basket of taxes on the better off. Its wealth tax is 1% on documented net assets above Rs 100 million, plus a capital value tax on foreign assets, estimated at Rs 50 to 90 billion in the first period and Rs 100 to 160 billion a year within 24 months. The same package taxes farm income for Rs 120 to 200 billion a year. The Ministry of Planning circulated it to the finance ministry, the tax authority and the State Bank; it is under examination and not yet policy.^[4] In June 2025 a Senate finance committee had recommended a one-time 2% tax on net assets above Rs 500 million, in its report on that year's Finance Bill.^[12] We found no record that it was adopted.

Does the public want it?

A survey of 7,500 adults in 2024 found that over 40% back a new general wealth tax, and the researchers report that support "jumped dramatically" when the money is earmarked for the poor or when taxpayers have a say in how it is spent.^[5] Higher-income respondents were more likely to support a wealth tax than lower-income ones.^[5]^[14] A majority opposed an inheritance tax when no details were given and a majority backed it when it applied only to inheritances above Rs 10 million, so ordinary families need an explicit threshold.^[5] Sixty percent of respondents have little or no confidence that the government acts for ordinary people, and 57% think the state is likely to misuse tax revenue.^[5]

The objections, answered

Valuation

Critics say wealth cannot be valued. The 2013 levy avoided the problem by counting only declared movable assets, and failed for a different reason: it left out everyone who did not file.^[3] Land has registry records, listed shares have market prices, and the Jamaat-e-Islami design starts from documented assets.^[4] That paper itself warns that valuation disputes and litigation can slow the first year's collection. The answer is a wide base and a threshold high enough that only large holdings are valued: Rs 100 million is a hundred times the old Rs 1 million line.^[3]^[4]

Flight

Much of the wealth in question is land and property. It cannot be moved, and the capital value tax on foreign assets in the same package targets the part that has been.^[4] A rich person who leaves still has to sell the land to take the money with them. An exit tax closes that route.

The informal economy

People who evade income tax have no income to tax. They still own the plots, farms and houses the money was turned into. The Sindh court's finding that the 2013 levy missed non-filers with more wealth than the filers it hit is the argument for a tax on assets, built from property records and not from tax returns.^[3]

What a new tax would need

First, a base that includes land, farms, property and listed shares, so the owner of ten thousand acres cannot do better than a salaried worker. Farm income now pays under Rs 4 billion a year.^[7] Second, a threshold of Rs 100 million or more, so the tax stays out of the middle class.^[4] Third, a statute that does not rest on voluntary wealth statements, so non-filers cannot escape, which was the Sindh court's objection to 2013.^[3] Fourth, a named use for the money. The survey found support jumps when the money is earmarked.^[5] A yield of Rs 100 to 160 billion a year is the Jamaat-e-Islami estimate. It is roughly a fifth to three-tenths of what salaried workers paid in 2024-25.^[4]^[6]

Where to look next

See the directory, map and method for Pakistan, and papers and reports. Other countries that dropped or kept the tax: India, Sweden, Switzerland.

Timeline

1963 The Wealth Tax Act introduces an annual tax on net wealth.
2003 The Finance Act 2003 repeals the Act under military ruler Pervez Musharraf.
2010 The MQM offers the government a wealth tax on big feudals and landlords in place of a higher sales tax.
2013 Finance Minister Ishaq Dar announces that the wealth tax "has been revived" with the Income Support Levy.
2014 The Finance Act 2014 repeals the levy.
2018 Incoming Finance Minister Asad Umar says a wealth tax will offset tax cuts.
2019 Umar backs a wealth tax and an inheritance tax at a pre-budget forum.
2023 Economist Pervez Tahir calls for wealth tax, inheritance tax and estate duties to be re-imposed.
2025 A Senate finance committee recommends a one-time 2% tax on net assets above Rs 500 million.
2026 Jamaat-e-Islami's package, circulated by the Ministry of Planning, includes a 1% wealth tax above Rs 100 million.

Sources

The 22 supporters in Pakistan