Salaried Class Penalized While Agriculture Sector Evades Taxes: Salaried Class Alliance

The salaried class pays tax on gross earnings without any allowable deduction, as against other classes of taxpayers, so the high rate of tax of 35 percent is unfair and oppressive, the Salaried Class Alliance said in a letter to the Tax Anomaly Committee. The alliance raised some big concerns about tax policies outlined in the Budget 2024-25 last week. It said the budget unfairly targets the salaried class, while agriculture has an extremely low revenue contribution and is “the biggest parking lot for corruption and illegal money”. The letter criticized the government’s approach of focusing on those already paying taxes instead of expanding the tax base. It highlighted the ambitious tax collection target for the Federal Board of Revenue (FBR) at Rs. 12,970 billion, 38 percent higher than last year, which places additional strain on the salaried class and other taxpaying segments. The letter outlines the following grievances. The alliance said the salaried class in Pakistan is heavily burdened due to high inflation and inconsistent availability of essential services such as gas, electricity, etc. Despite suggestions to increase salaries for government employees by up to 35 percent and pensions by up to 22 percent, the private sector, experiencing similar inflationary pressures, remains significantly burdened by high taxes. The Alliance suggests the restoration of tax rates and tax credits for investments and payments against insurance for the salaried class. Additionally, they propose several alternative ways to increase tax collection without disproportionately impacting salaried taxpayers: The Alliance urges the government to reassess the proposed tax policies and address the broader issue of tax evasion and under-reporting within the economy, emphasizing that equitable tax burden distribution is essential for sustainable economic growth.