Government Considers Income Tax Relief for Salaried Individuals Amid Rising Economic Pressures
- Prime Minister Shehbaz Sharif’s government is exploring income tax relief for the salaried class.
- Relief package worth Rs40 billion under consideration, with funding possibly diverted from development budget.
- IMF consultation planned as part of the relief strategy.
The government, led by Prime Minister Shehbaz Sharif, is exploring ways to provide income tax relief for salaried individuals. This move comes as the coalition government faces mounting pressure from ongoing protests by Jamaat-e-Islami (JI) in Rawalpindi, which are focused on high electricity bills and rising taxes.
During a recent federal cabinet meeting, Sharif emphasized the government’s commitment to reducing electricity costs to alleviate public financial strain, while urging that the issue should not be used for political gain. The government’s economic team is now tasked with evaluating various options to lower direct taxes for salaried workers earning up to Rs100,000 per month.
Sources within the finance ministry revealed that the government is considering a substantial relief package worth Rs40 billion for low-income salaried individuals. To fund this, officials are contemplating reallocating resources from the development budget. Additionally, the government plans to consult with the International Monetary Fund (IMF) regarding the proposed relief measures.
The National Assembly recently passed a budget with a challenging tax revenue target of 13 trillion rupees ($46.66 billion) for the upcoming fiscal year. This budget includes a 48% increase in direct taxes and a 35% rise in indirect taxes, as well as a significant hike in taxes on various products and income.
Despite these increases, the Consumer Price Index (CPI) inflation rate showed a decline to 11.1% in July 2024, down from 12.6% in June and 28.3% in the same month last year, according to the Pakistan Bureau of Statistics (PBS).