Federal Minister for Finance and Revenue on Wednesday brushed off the impression that the government targeted the already burdened salaried class.
“We have protected the salaried class,” said Aurangzeb while talking to a private channel after his Budget 2024-25 speech. “The Rs600,000 per year salaried segment remains exempted from tax. While there have been changes in the slabs, you will find there is minimal impact,” he said.
The remarks made by the Finance Minister come after the government increased tax liability for all persons earning more than Rs50,000 a month in Budget 2024-25.
Tax slabs in Finance Bill 2024 reveal that the highest impact would be on anyone earning equal to or more than Rs6 million a year (Rs500,000 a month). The tax liability for these earners increases by Rs22,500.
On the other hand, the debt-ridden government announced an increase in the salaries of Grade 1 to 16 government employees by 25%, while salaries of officers from Grade 17 to 22 were raised by 20%. Additionally, a 15% increase in pension for retired employees was also recommended.
When queried on the said move, Aurangzeb said the decision was taken given the inflation rate which stood at 24-25% during the outgoing fiscal year.
“Keeping the inflation rate in view, the government took this decision, which is a short-term compensation for the inflation-related expenses of these employees,” he said.
On the IMF programme, the former banker said that the priorities of Pakistan are “very aligned on these themes” with the International Monetary Fund (IMF).
“The budget presented was an important milestone as considerations made with the IMF were to be reflected in this,” he said.
“We remain in talks, which are continuing virtually, with the lender on other aspects. By early July, we should be looking at the broad contour of the staff-level agreement,” he said.
Aurangzeb said tax exemptions to the tune of Rs3.9 trillion were given during the ongoing fiscal, which need to be removed “in terms of bringing equity and fairness into the tax system”.
The government has set an ambitious tax revenue target of Rs12.9 trillion, nearly 40% higher than the last year.
However, Aurangzeb sounded confident that the Federal Board of Revenue (FBR), which has shown a revenue growth of about 30% in the outgoing fiscal, would achieve the target.
“I am very optimistic as we plug these loopholes, put measures in place and bring additional sectors into the net, we will be able to meet the target”
On taxing the agriculture sector, the finance minister said that the issue can be resolved through negotiation between the federal and provincial governments.
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