In response to growing concerns over the increasing tax burden on salaried individuals, President Asif Ali Zardari is expected to announce significant relief measures for salaried and low-income groups during his address to the joint session of Parliament on March 10.
According to government sources, these incentives will be incorporated into the upcoming annual budget, aiming to alleviate financial strain on salaried workers who have been disproportionately taxed compared to other sectors such as retail, wholesale, agriculture, and real estate.
Rising Tax Burden on Salaried Individuals
Official figures reveal that the salaried class contributed Rs285 billion in taxes last year, a figure projected to reach Rs577 billion by June. In the first seven months of the current fiscal year alone, Rs285 billion has already been collected from salaried employees—an increase of Rs100 billion from the same period last year.
Economic analysts argue that the government is relying heavily on salaried individuals to meet revenue targets set by the International Monetary Fund (IMF). Experts have recommended capping the maximum tax rate at 20% and providing tax exemptions for monthly incomes up to Rs120,000 to ensure a more balanced tax structure.
Government Recognizes Imbalance in Taxation
Finance Minister Muhammad Aurangzeb recently acknowledged the unfair distribution of the tax burden, highlighting that the manufacturing, services, and salaried sectors contribute disproportionately compared to agriculture, real estate, and retail.
Speaking at the Pakistan Retail Business Council on February 20, the minister emphasized the need for these under-taxed sectors to play a greater role in revenue generation. During a media interaction in Lahore on February 23, he indicated that relief for salaried individuals is under consideration for the next budget. He also confirmed that discussions are ongoing with business representatives and that efforts are underway to reform the Federal Board of Revenue (FBR) to create a more equitable tax system.
