Increased taxes on Pakistan’s salaried class erode disposable incomes, exacerbating economic burdens and hindering overall financial stability. Whenever there is revenue shortfall, salaried class gets targeted and bears the brunt of International Monetary Fund (IMF) and government policies. Increasing rates of electricity, gas, food and fuel have impacted the purchasing power of individuals throughout the country. Under such a condition of inflation, tax burden on salaried class leaves them with limited income. This important fraction of urban workforce gets directly affected by flying tax rates. Revenue generation through this traditional means of budgeting leverages those who have more fraction on country’s Gross Domestic Product.

Salaried class has been an easy target as they do not agitate in tax payment, unlike elite business class, which finds ways to escape taxes. Salaried class has now become fourth largest contributor of income tax. According to a report of Federal Board of Revenue, income tax collection from salaried class has been increased by 38%. Tax rate for salaried individuals has been doubled through the Finance Bill 2024. Tax liability, for those earning more than 50,000, has been increased. The tax taken from an individual earning six million per year is same as the one earning 12 million.

IMF has played a role in proposing policies to burden salaried class for generating revenue to pay the debts. Although there have been talks among officials for compensation, but salaried class remains a target. According to FBR Chairman, Amjed Zubair Tiwana, government will not withdraw from new revenue generation measures as per budget 2024-2025. Salaried class has not been compensated despite parleys with IMF. Instead, enforcement is prioritized to make individuals pay taxes according to new budget.

This has ignited anger and distress in workers who are already hardly making both ends meet. Recently, ‘Salaried Class Alliance Pakistan’ addressed their grievances to the government by voicing their issues. They have appealed the Supreme Court to take suo motu notice against this unjust treatment. Lawmakers have critised the government for facilitating the real estate and agricultural sector by providing them subsides and exemptions. They also pin pointed that such injustice with the salaried class can lead to brain drain. They have presented arguments regarding the issue in the budget debate in National Assembly.

The government’s justification for such tax increase to meet IMF conditions of financial assistance is controversial as it puts additional strain on middle class. Salaried class contribution to the budget is Rs 375 billion now. The real cause of disappointment is that this unjust taxation system has continued. Placing the burden on trade, industry and salaried class will choke the economy of the country. This will further lead professionals to seek employment outside the country for better opportunities. Otherwise, there is also probability that they may engage in illegal activities leading to a law-and-order situation.

There is lack of willingness to tax the class that contributes more towards the GDP. There have been calls for bringing the elite business class under the tax net instead of slaughtering the salaried class. Meanwhile, price hikes in electricity bill cuts most of the remaining salary. When salaried class has to give such heavy amount of tax, it should also be provided with relief. Otherwise, it will be hard to manage expenses and people will go for alternatives that can adversely impact the workforce system. The continuity of traditional budgeting is impacting the sustainability and growth of the country’s economy. Under such conditions of financial instability, social and psychological wellbeing of the salaried class are being negatively impacted. By widening the tax base, salaried class can be exempted from high taxes.

Government needs to widen the tax base for revenue generation instead of burdening the salaried class. It is important to rationalize Pakistan’s tax policies for the salaried class because their contribution is towards growth. It has to be ensured that their productivity is not compromised due to regressive and unjust tax measures. At such payment deduction rate, salaried class should be given more facilities. Education for their children should be free of cost as most the salary expenditure goes into it. In addition, medical, liberal incentives and other governmental facilities must also come along for the sake of sustainability.

Increased taxes on Pakistan’s salaried class erode disposable incomes, exacerbating economic burdens and hindering overall financial stability. Whenever there is revenue shortfall, salaried class gets targeted and bears the brunt of International Monetary Fund (IMF) and government policies. Increasing rates of electricity, gas, food and fuel have impacted the purchasing power of individuals throughout the country. Under such a condition of inflation, tax burden on salaried class leaves them with limited income. This important fraction of urban workforce gets directly affected by flying tax rates. Revenue generation through this traditional means of budgeting leverages those who have more fraction on country’s Gross Domestic Product.

Salaried class has been an easy target as they do not agitate in tax payment, unlike elite business class, which finds ways to escape taxes. Salaried class has now become fourth largest contributor of income tax. According to a report of Federal Board of Revenue, income tax collection from salaried class has been increased by 38%. Tax rate for salaried individuals has been doubled through the Finance Bill 2024. Tax liability, for those earning more than 50,000, has been increased. The tax taken from an individual earning six million per year is same as the one earning 12 million.

IMF has played a role in proposing policies to burden salaried class for generating revenue to pay the debts. Although there have been talks among officials for compensation, but salaried class remains a target. According to FBR Chairman, Amjed Zubair Tiwana, government will not withdraw from new revenue generation measures as per budget 2024-2025. Salaried class has not been compensated despite parleys with IMF. Instead, enforcement is prioritized to make individuals pay taxes according to new budget.

This has ignited anger and distress in workers who are already hardly making both ends meet. Recently, ‘Salaried Class Alliance Pakistan’ addressed their grievances to the government by voicing their issues. They have appealed the Supreme Court to take suo motu notice against this unjust treatment. Lawmakers have critised the government for facilitating the real estate and agricultural sector by providing them subsides and exemptions. They also pin pointed that such injustice with the salaried class can lead to brain drain. They have presented arguments regarding the issue in the budget debate in National Assembly.

The government’s justification for such tax increase to meet IMF conditions of financial assistance is controversial as it puts additional strain on middle class. Salaried class contribution to the budget is Rs 375 billion now. The real cause of disappointment is that this unjust taxation system has continued. Placing the burden on trade, industry and salaried class will choke the economy of the country. This will further lead professionals to seek employment outside the country for better opportunities. Otherwise, there is also probability that they may engage in illegal activities leading to a law-and-order situation.

There is lack of willingness to tax the class that contributes more towards the GDP. There have been calls for bringing the elite business class under the tax net instead of slaughtering the salaried class. Meanwhile, price hikes in electricity bill cuts most of the remaining salary. When salaried class has to give such heavy amount of tax, it should also be provided with relief. Otherwise, it will be hard to manage expenses and people will go for alternatives that can adversely impact the workforce system. The continuity of traditional budgeting is impacting the sustainability and growth of the country’s economy. Under such conditions of financial instability, social and psychological wellbeing of the salaried class are being negatively impacted. By widening the tax base, salaried class can be exempted from high taxes.

Government needs to widen the tax base for revenue generation instead of burdening the salaried class. It is important to rationalize Pakistan’s tax policies for the salaried class because their contribution is towards growth. It has to be ensured that their productivity is not compromised due to regressive and unjust tax measures. At such payment deduction rate, salaried class should be given more facilities. Education for their children should be free of cost as most the salary expenditure goes into it. In addition, medical, liberal incentives and other governmental facilities must also come along for the sake of sustainability.