Prime Minister Shehbaz Sharif has directed his finance team to explore easing income tax for the salaried class as part of the Pakistan Muslim League-Nawaz (PML-N)-led government’s efforts, Geo News reported, citing finance ministry sources.
This move comes amid heightened pressure from Jamaat-e-Islam (JI) protests in Rawalpindi against inflated electricity bills and high taxes.
During a federal cabinet meeting today, Prime Minister Sharif emphasized the government’s commitment to reducing electricity costs to alleviate public burden, urging that the matter should not become a political issue.
Sources revealed that the government is considering tax relief for individuals earning up to Rs100,000 monthly. They are also contemplating a Rs40 billion relief package targeting lower-income salaried workers, potentially reallocating funds from the development budget.
The sources added that consultations with the International Monetary Fund (IMF) will proceed regarding this proposed tax relief.
On June 28, the National Assembly approved a national budget, setting a challenging tax revenue target of 13 trillion rupees ($46.66 billion) for the upcoming fiscal year—a 40% increase over this year to support negotiations for a new IMF rescue deal.
The increase in tax revenue comprises a 48% rise in direct taxes and a 35% increase in indirect taxes over this year’s revised estimates. Non-tax revenue is expected to rise by 64%, including hikes in petroleum levies.
Despite these increases, textile, leather, and mobile phone products will see an 18% tax increase, and capital gains from real estate will also face higher taxes.
However, the latest Consumer Price Index (CPI)- based inflation data from the Pakistan Bureau of Statistics (PBS) showed that inflation decreased to 11.1% in July 2024, down from 12.6% in June 2024 and 28.3% from the same month last year.
