In a bid to address growing concerns over the tax burden on the salaried class, President Asif Ali Zardari is expected to announce major incentives for salaried and low-income groups on March 10 during his address to the joint session of Parliament.
According to government sources, the relief measures will be incorporated into the second annual budget of the current government.
The move comes amid increasing criticism from economic experts and stakeholders over the disproportionate taxation of salaried individuals while other sectors, including retail, wholesale, agriculture, and real estate, contribute significantly less to the national exchequer.
Mounting tax burden
As per official 0figures, the salaried class in Pakistan paid Rs285 billion in taxes last year, with projections suggesting the collection will reach Rs577 billion by June. In the first seven months of the current fiscal year alone, Rs285 billion has been collected from salaried individuals—Rs100 billion more than the same period last year.
Economic analysts argue that the government has placed an unfair burden on salaried workers to meet International Monetary Fund (IMF) revenue targets. Experts have suggested capping the maximum tax rate at 20 percent and granting tax exemptions for incomes up to Rs120,000 per month.
Govt acknowledges disproportionate taxation
Finance Minister Muhammad Aurangzeb recently acknowledged the imbalance in taxation, stating that the manufacturing, services, and salaried sectors bear a disproportionate tax load compared to other sectors.
Addressing the Pakistan Retail Business Council on February 20, the minister emphasized that agriculture, real estate, and retail must also play their role in tax contributions.
During a media talk in Lahore on February 23, the finance minister hinted at potential relief for the salaried class in the upcoming budget. He also confirmed that discussions with business representatives were underway, alongside efforts to reform the Federal Board of Revenue (FBR).
