Pakistan

After higher taxation, a quiet ‘revolution’ is taking place within Pakistan’s salaried group

  • Some members of 'Salaried Class Alliance Pakistan' hold press briefing at Karachi Press Club, outlining grievances with 'unfair taxation measures'
Published June 25, 2024

There was a rather unique press conference at the Karachi Press Club (KPC) on Tuesday. It was not a textile association or a business chamber holding a briefing to demand lower taxes or cheaper electricity. It was the people who help run Pakistan’s industrial and services sectors.

In what was in all likelihood their first media appearance, members representing Pakistan’s salaried group held a short and concise press briefing listing their complaints and appealed to Finance Minister Muhammad Aurangzeb to pay heed.

“What was the point of a well-informed person from the formal sector taking over the reins if tax collection was to be increased like this?” asked Adeel Ahmed Khan, member of the ‘Salaried Class Alliance Pakistan’, in a press conference inside KPC premises.

Ironically, while they were holding the briefing, Aurangzeb was introducing the minor modifications to the budget in the National Assembly in Islamabad. The finance chief did not mention the salaried group.

Press conference

Budget 2024-25: income tax calculator for FY25

Nonetheless, six members representing the so-called alliance were present at the briefing, taking turns as they listed grievances with Pakistan’s taxation system.

Adeel’s reference was towards Aurangzeb, who was the president and CEO of Habib Bank Limited before he left the positions to take over as finance chief amid hope that he could help steer the economy out of trouble.

Instead, what Pakistan’s salaried group saw was the imposition of higher taxes in Aurangzeb’s first budget announcement earlier this month, sending shivers down people employed in the formal sector.

“If taxes were to be increased like – Rs100 billion from here and Rs50 billion from there – then anyone could have done this.”

The rather-hastily arranged press briefing came after the government increased tax liability for all persons earning more than Rs50,000 a month in Budget 2024-25 announced on June 12.

Senate panel rejects increased tax on salaried class

Tax slabs in Finance Bill 2024 revealed 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 increased by Rs22,500.

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

While the government did not touch the income tax exemption threshold – which still stood at Rs50,000 – liability increased across all other levels of salaries. For example, a person earning Rs100,000 a month will now pay Rs2,500 a month, up from the earlier level of Rs1,250.

Govt to see if it can ‘protect’ Pakistan’s salaried class further, says Aurangzeb

The Salaried Class Alliance Pakistan was established last year after the previous budget, which also saw higher taxes on the group.

Islamabad, over the years, has increased taxes on salary and their contribution shows a seven-times increase over 11 years. The increase over the last four years has been especially profound.

“Landlords who earn 20% of GDP from agriculture pay less than 1% in taxes, while wage earners are paying up to 35%,” read a statement issued by the Alliance.

“There is only one class – the salaried class in Pakistan – that pays full income tax and the tax burden was already very high. This middle class has been broken in the recent budget,” said another member Ubaidullah Sharif.

Adil Iqbal, another member, said that instead of widening the tax net, the already depressed salaried group has been further burdened.

“Movement of educated people from Pakistan to foreign countries has increased by 119% in the last one year and, according to media reports, a major reason for this is the brutal increase in taxes. This brain drain of educated youth needs to be reduced immediately,” he said.

Alliance in the press briefing demanded that the minimum tax threshold for salaried employees should be fixed at Rs100,000 per month instead of Rs50,000. The tax rate should be brought down to at least the outgoing fiscal year’s rate

Addressing so-called counter-arguments that the ‘brain drain’ will also help Pakistan in the form of remittances, Adil said if the ‘rulers’ think like this, they are “delusional”.

He added that those who move with their families – the skilled lot – does not send back remittances.

Komal Ali, another member of the group, also said that disgruntled people leaving Pakistan wouldn’t want to send remittances.

It was also stressed that many small businesses are now trying to pay their employees in cash, defeating the official purpose to formalise the economy.

‘Demands’

The alliance in the press briefing demanded that the minimum tax threshold for salaried employees should be fixed at Rs100,000 per month instead of Rs50,000. The tax rate should be brought down to at least the outgoing fiscal year’s rate.

The tax exemptions given to government officials on their perks, vehicles and plots should either be abolished or equivalent exemptions should be given to all private sector employees.

Instead of putting the entire burden on the salaried group, the tax net should be increased.

The Alliance said that they may also explore legal options and knock the doors of the Supreme Court if the government turns a deaf ear to their demands.

Comments

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Shahzad Qureshi Jun 25, 2024 08:53pm
Deduct tax rate from salaried persons
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Irfan Jun 25, 2024 09:59pm
I agree with demands of Alliance.
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Nadeem Sheikh Jun 26, 2024 06:35am
Salaried people are an easy target to collect taxes. They pay taxes in Pakistan like they are living in Norway. Cruel to mention the least.
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EQ Jun 26, 2024 06:44am
At the rate they are going they will probably end up taxing 100% of salary. This is making doing business in Pak difficult as good employees just want to leave Pakistan or frustrated impacting quality
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Usman Jun 26, 2024 09:10am
Deduct tax from private companies employees from salaries directly.get all companies registeres.this way we can reduce tax when every one will.pay.
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Asif Ali Jun 26, 2024 09:27am
I totally agree
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AF Jun 26, 2024 12:21pm
What 'revolution'? No apparent practical options for a salaried person, except take it or leave it.
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Adil Iqbal Ladha Jun 26, 2024 03:54pm
These Demands are Reasonable, Govt Should Consider and Accept these.
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Tariq Qurashi Jun 26, 2024 04:35pm
Many salaried people with skills are moving abroad. Squeezing them further will just make them leave in larger numbers. The people left in the country will be increasingly the poor and uneducated.
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KU Jun 26, 2024 10:27pm
Its a protest by vulnerable humans of Pakistan, who are in extreme pain n uncertain future of their families. They are not as lucky as 3 million raj servants or vile robber barons of our system.
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T Jun 27, 2024 08:18am
donkeys and horses are treated the same in Pakistan, the only difference is donkeys are affixed at the top while horses have to scramble at the bottom for their living.
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Syedzada Jun 27, 2024 10:15am
Salaried class is an easy target because it is known that it won't resist and making it easier to impose burdens on them, so they imposed it.
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Javid Jun 27, 2024 10:43am
Govt.'s policy is to increase burden who are already paying. No practical measures to force retailers.
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zh Jun 27, 2024 08:14pm
The approach of salaried class is too timid to be successful.
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