Salaried Class Up in Arms Over Tax Hike in Finance Bill 2024

Salaried Class Up in Arms Over Tax Hike in Finance Bill 2024

Pakistan’s salaried class has erupted in protest against the proposed tax hikes outlined in the recently unveiled Finance Bill 2024. The Salaried Class Alliance, a representative body for salaried workers, has submitted a scathing critique to the newly formed FBR technical anomaly committee.

Feeling the Squeeze: Inflation and Essential Services

The salaried class alliance highlights the already heavy burden on salaried individuals due to high inflation and unreliable access to essential services like electricity and gas. They argue that despite paying high taxes, the working class receives inadequate healthcare and education facilities. This, combined with a lack of deductions on salary income, is pushing skilled professionals to seek opportunities abroad, leading to a concerning “brain drain.”

The recent announcement of a 25% salary increase for government employees further underscores the perceived disparity. The alliance argues that private sector workers face similar inflationary pressures yet are expected to shoulder an even greater tax burden, including the indirect impact of increased levies like the Petroleum Levy. Provincial tax hikes on top of this further exacerbate the situation.

Brain Drain Fears and Call for Equity

The salaried class alliance points to the staggering 119% increase in Pakistani emigration, with many departing individuals being experienced professionals. They argue that the proposed tax slab changes, particularly the earlier application of the top 35% tax rate, will only accelerate this trend. The formal sector loses not only talent but also tax revenue when skilled workers transition to the informal, untaxed economy.

The alliance emphasizes the unfairness of increasing tax revenue solely from the salaried class, who already bear numerous societal costs that the government fails to address. They propose alternative solutions, including:

• Broadening the Tax Base: Focus on bringing more individuals and businesses into the tax net, particularly the estimated 7.5 million registered non-filers and the undocumented economy.

• Closing Loopholes: Ensure accurate property valuations and collect appropriate taxes on real estate transactions.

• Taxing Agriculture: Address the low tax contribution from the agriculture sector, a significant portion of the GDP.

• Enhancing Transparency: Implement measures for housing societies and restaurants to record and declare their full sales and tax liabilities.

• Increased Advance Tax Collection: Raise advance tax on non-filers’ utility bills and commercial/industrial connections.

Seeking Dialogue and Sustainable Solutions

The Salaried Class Alliance acknowledges the complexities of fiscal policy but urges immediate action to ease the burden on salaried taxpayers. They propose collaborating with the FBR committee to find practical solutions that recover taxes from the currently untaxed sectors, rather than disproportionately burdening existing taxpayers.

The salaried class alliance’s concerns highlight the delicate balancing act governments face when attempting to raise revenue. While the need to increase tax collection is undeniable, targeting already strained middle-income earners can have long-term negative consequences. The coming weeks will be crucial as the government weighs these concerns and seeks alternative solutions to meet its fiscal needs.