One of the impacts of inflation has been a significant decrease in consumers’ purchasing power. Currently, salaries are much lower; after taxation, the remaining amount is meagre. As a representative body, the multinational corporations (MNCs) in Pakistan have rightly called for a revision of the existing tax salary structure.
The unprecedented inflationary pressures and high-interest rates have been particularly challenging for the salaried class. Additionally, the top marginal personal income tax rate exceeds the corporate income tax rate. A well-designed tax policy should consider current trends and strive to provide relief to consumers to the greatest extent possible.
The Overseas Investors Chamber of Commerce and Industry (OICCI) has made other recommendations for the upcoming budget, such as bringing other service providers into the tax net to expand the tax base. Furthermore, they suggest including agricultural income within the federal government’s jurisdiction. This demand is of great importance, as including this sector would ensure fair and transparent tax collection. This has been missing in the sector.
All the proposed recommendations and revisions aim to protect Pakistan’s revenue base, while also providing relief for the salaried class and enabling equitable tax collection and distribution. These recommendations are crucial and should be taken into consideration during the budget deliberations. Although there may not be much room for relief, and it is widely agreed that the budget will largely follow IMF directives, there is still an opportunity for inclusion.
While it is important to safeguard the salaried class and their affordability during this crisis, another pressing issue is the rising joblessness. The rate of job loss is increasing rapidly, and the situation is deteriorating. Even without such dire circumstances, prioritising public relief and welfare should always be a policy priority. Therefore, the consideration of an increased taxable limit is necessary. Having a 2.5 percent tax on a monthly income of 50,000 rupees makes life unmanageable. A national wage adjustment must be implemented promptly.