On Wednesday, Pakistan’s Finance Minister, Senator Muhammad Aurangzeb, unveiled an 18.5 trillion rupees budget in the National Assembly. The Pakistan Budget 2024-25 received mixed reviews from economists. However, one major concern for most Pakistanis is the new tax heavily imposed on salaried employees.
On the other hand, as in previous years, government employees will receive a salary increment. Employees in grades 1-16 will get a 25% raise, while those in grade 17 and above will receive a 20% increase. Additionally, a 15% enhancement in the pensions of federal government employees was also announced.
Former Khyber Pakhtunkhwa (KP) finance minister Taimur Salim Jhagra criticized the budget while speaking to mainstream media, saying, “The hike in salaries of government employees from 20% to 25% for Grade 1-22 workers would impact the national exchequer by around Rs1 to Rs1.5 trillion amid a severe fiscal situation.”
As economic turmoil has gripped the country, the middle class in Pakistan has nearly vanished. Besides business and government employment, most citizens work private jobs in various sectors. Many people are living hand-to-mouth, relying on their monthly income for daily activities.
Gone are the days when a single working individual could support an entire household. It has become nearly impossible for families to manage expenses even if every member is earning.
The heavy tax burden on the working class will negatively impact individuals in unimaginable ways and lead to further turmoil in the country. The minimum salary proposed by the government in the next year’s budget is Rs. 37,000, which is still not enough to provide relief for lower-income employees.
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Moreover, the government has raised both direct and indirect taxes to a historic high. “Out of additional taxation measures of Rs1.761 trillion, the FBR will impose additional taxes of Rs443 billion in the form of income tax, increasing rates for salaried and non-salaried classes — under Personal Income Tax (PIT) Rs224 billion, removal of GST exemptions and slapping GST Rs485 billion, Federal Excise Duty (FED) Rs289 billion, and Customs Duty Rs700 billion,” according to GEO News.
Tax revenue collection has surged by nearly 30%. However, this growth has largely resulted from the increased tax burden on working-class individuals and the corporate sector.
Similar to last year, the current fiscal period has been extremely stressful for citizens. With worsening economic conditions, declining real wages, and high inflation creating significant hardships for low to middle-income households.
The federal government is hailing this fiscal year’s budget as a major victory, but it comes at the expense of the sacrifices of the public.
As Pakistan is about to strike a new International Monetary Fund (IMF) deal, the new raise in taxes would bring further revenues of Rs3.8 trillion in line with the IMF demands.
With such turmoil, Pakistan may experience more heightened social and economic issues in the coming years. The public demands relief from heavy taxes, not only on salaries but also on everyday items.
