Karachi Doesn’t Pay 60% of Pakistan’s Taxes — Latest Data Shows One-Third Share
Tax Collected vs. Tax Paid — Understanding the Difference
For years, it has been claimed that Karachi pays 60 percent of Pakistan’s taxes. But the latest FBR data for 2023–24 reveals a different reality: the city contributes about 30.7 percent — still the highest share nationwide, but far from the popular myth.
Karachi: For years, Karachi has been touted as the city that “pays 60 percent of Pakistan’s taxes.” This claim has often been used in political speeches and public debates to highlight the metropolis’s economic significance. But according to the Federal Board of Revenue (FBR), the reality is quite different.
In fiscal year 2023–24, Karachi contributed 30.7 percent of Pakistan’s total tax collection — the largest share of any city, but only half of the figure that has long circulated in the public narrative.
The Real Numbers
FBR’s Large Taxpayers Office (LTO) Karachi collected PKR 2,522 billion in 2023–24. This included:
- PKR 853 billion in customs duty
- PKR 3,400 billion in inland revenue (income tax, sales tax, and federal excise duty combined)
- Of which PKR 1,360 billion came from income tax
Pakistan’s overall revenue collection for the year stood at about PKR 13,800 billion.
How Other Cities Compare
While Karachi led the rankings, other cities made substantial contributions:
- Lahore (LTO): 17.09% (PKR 1,402 billion)
- Islamabad (LTO): 14.18% (PKR 1,164 billion)
- RTO Lahore: 4.7%
- LTO Multan: 4.1%
Combined, the top five offices contributed 70.7% of total FBR revenue, while the remaining 29.3% came from other cities across Pakistan.
Tax Collected vs. Tax Paid
Economists stress the need to distinguish between taxes collected in a city and taxes actually paid by its residents.
- Indirect taxes such as customs duty, sales tax, and federal excise duty are included in the price of goods. If a product clears customs in Karachi but is sold in Faisalabad, the tax is recorded as “Karachi collection” but paid by a consumer in Faisalabad.
- Income tax collections are also skewed because of withholding taxes and the concentration of corporate headquarters in Karachi. Employees across Pakistan may pay income tax, but if their company is headquartered in Karachi, that tax is booked as part of Karachi’s contribution.
Why the 60% Myth Persists
- Outdated Data: In the mid-2000s, Karachi’s share was much higher (over 50% in some years).
- Political Rhetoric: The figure has been repeatedly cited in speeches without verification.
- Collection vs. Payment Confusion: The misconception arises from equating collection points with actual taxpayers.
Karachi’s Economic Weight
Despite the myth-busting numbers, Karachi remains Pakistan’s economic backbone:
- Contributes 20–25% of GDP.
- Generates around 30% of industrial output.
- Hosts the Pakistan Stock Exchange, major banks, and multinational headquarters.
- Handles 95% of Pakistan’s foreign trade through Karachi Port and Port Qasim.
This makes Karachi the country’s most critical tax hub — even if its share is closer to one-third rather than two-thirds.
The per capita comparison shows that Islamabad leads, due to a smaller population but higher concentration of high-income earners and corporate offices. Karachi and Lahore, with much larger populations, show lower per capita contributions despite higher absolute numbers.
The Bottom Line
Karachi does not pay 60 percent of Pakistan’s taxes. The actual figure is about 30–31 percent.
The misconception persists because of outdated statistics and confusion between where taxes are collected versus who actually pays them. Nonetheless, Karachi remains the single largest revenue hub of Pakistan — vital to sustaining the national economy.
