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The Pakistan Business Council (PBC), the country’s largest corporate advocacy platform, has warned that the imposition of budgetary measures proposed for the salaried class would “accelerate brain drain” in Pakistan.

The PBC raised its concerns in a letter dated June 20, 2024, addressing the anomalies arising from the proposed budgetary measures.

As per data provided by the recently released Pakistan Economic Survey 2023-24, highly skilled persons who proceeded abroad for employment increased from 20,865 in 2022 to 45,687 in 2023, a massive increase of 119%.

“Similarly, an increase of 26.6% and 2.28% was also observed in highly qualified and semi-skilled trades during 2023. On the other hand, a rise of 8.7% was witnessed in unskilled categories,” the Economic Survey revealed.


Budget 2024-25: income tax calculator for FY25

Salaried group: income tax calculator for FY24


The PBC said “the 119% increase in the number of Pakistanis emigrating is surely a major cause for concern”.

“Many of these individuals are experienced, high-quality professionals that the formal sector is losing.

“The proposed changes in slab rates, particularly the earlier application of the 35% top rate, will accelerate this brain drain,” PBC warned.

The remarks 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.

Interestingly, the tax increase for salaried persons earning as high as Rs12 million a year (Rs1 million a month) is also Rs22,500.

Meanwhile, the PBC said that the formal sector not only loses talent when individuals emigrate but also suffers from their transition to the informal, untaxed sector.

PBC said that the proposal to increase tax revenue from this sector “is unjust”.

“Unlike a government, which can print money and borrow to fund the 20-25% increase in salaries of its employees, the private sector will be adversely affected by a higher brain drain as professionals seek lower-taxed environments in and outside Pakistan,” it said.

The council highlighted that a vast majority of Pakistanis are trying to move abroad due to factors including inflation and tax rates. “Further increasing the tax rate while realizing the fact that salary income is taxed on a gross basis, is an anomaly and needs to be rectified,” it said.

Comments

200 characters
KU Jun 20, 2024 01:07pm
Issues like brain drain or food security or rights violations is the least of govts concern, its simply criminal negligence. Avg immigration for jobs is 50K professionals n 800K un-skilled workers.
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Maqbool Jun 20, 2024 02:21pm
That’s One way to get rid of Talent. Another way is for incomes of Rs 12m per year, a private sector Retiree pay 45% tax in this budget and Govt retiree to pay NO tax on his pension. Why stay ?
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Usman Jun 20, 2024 03:04pm
Brain drain is very less.Tge good ones alwasy leave irrespective of the govt.its the labour class leaving now.
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Usman Jun 20, 2024 03:05pm
@Maqbool, raise your voice against pensions .say No to pensions.
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Maqbool Jun 20, 2024 04:04pm
@Usman, Islamabad doesn’t listen to that call ! You seriously think they’ll tax their Tax ?
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Arifeen Jun 21, 2024 11:02pm
Unresonable tax imposition should be abolished ASAP to address the salaried class concerns. Justice delayed would be Justice denied.
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Muhammad aumair Jun 22, 2024 11:18am
Why government increase tax rate in salary person
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