Finance Minister Muhammad Aurangzeb has assured the government’s resolve to stand firm by its commitments to the $7 billion International Monetary Fund (IMF) programme.
“We are in a three-year Fund programme and know where we are, what we have committed and we are going to stay firm on those commitments,” said the finance minister while speaking at the “Dialogue on the Economy” event organised by the Pakistan Business Council in Islamabad.
Hinting that the tax burden on the salaried class might be rationalised in the coming budget, he said that a few things might have to be phased in or phased out in the next budget 2025-26.
The minister’s remarks come against the backdrop of statistics which reveal that the salaried class contributes over 300% more in taxes than exporters during the first half of the current fiscal year.
The Federal Bureau of Revenue (FBR), collected Rs243 billion in the first half of the current fiscal year against a collection of Rs157 billion in the same period of last financial year from the salaried class.
Even with the combined contribution of both exporters and retailers, the salaried class paid more income tax during the first six months (July-Dec) period of the current fiscal year.
On the demand of the International Monetary Fund (IMF), the rates of slabs of the salaried class were revised upward, especially for those who are drawing more than Rs0.5 to Rs1 million per month in salary.
Keeping in view the existing pace, it would be the first fiscal year in the history of Pakistan when the government was going to force the salaried class to cough up a whopping tax amount of Rs500 billion into the national kitty by June 30, 2025.
Separately, the country’s tax filings expose a striking disparity as an astonishing 43.3% of the 5.9 million returns submitted declared zero taxable income, while only 3,651 individuals reported earning over Rs100 million, underscoring the narrow tax base in the country.
Revealing that the government intends to simplify the tax filing process for the salaried class, the finance czar remarked that although the country achieved stabilisation but there was no automatic switch from stabilisation to growth.
“We need to be very clear that we fundamentally changed the DNA of the economy, [so] that we do not get into trouble,” he said.
Touching upon the State Bank of Pakistan’s projection of reaching a $13 billion foreign exchange reserves by the end of the current fiscal, Aurangzeb termed it “a very important milestone”.
Meanwhile, talking about the rightsizing of the federal government, Aurangzeb said a number of ministries had been merged or abolished, and they were monitoring that.
“We have announced that about 150,000 posts are going to be abolished, which are vacant. Roughly 30,000-plus has already been done,” the minister said.
