Islamabad:
The salaried class paid an astounding income tax of 331 billion rupees during the eight months of the current financial year, or 1,350% more than taxes paid by retailers, but still not enough for the government to require relief from the International Monetary Fund (IMF) for the marginalized segment.
Total contributions to employee income tax during the July-February period for this financial year were 120 billion rupees or 56% more than 211 billion rupees collected during the same period of the last financial year.
The government of Prime Minister Shehbaz Sharif had targeted the collection of 75 billion additional rupees in the salaried class for the financial year 2024-25. The figure is already more than 120 billion rupees and four months remain at the end of the fiscal year.
Last year, the salaried class paid 368 billion tax rupees. But despite this exhausting burden for employees, who pay taxes on gross income without adjustment of expenses, the government did not address the question of the lowering of this burden with the IMF during recently organized talks.
There was no discussion with the IMF to reduce the tax burden of the salaried class, sources said. When contacted, the FBR spokesman, Dr. Najeeb Memon, said the government is examining taxes on the salaried class in the next fiscal year.
Unlike RS331 billion paid by employees, the retailers, mostly not recorded, contributed only 23 billion rupees due to income tax on their purchases. The amount of the tax that merchants paid under article 236-h was 1,350% lower than the taxes paid by employees.
Wholesalers and distributors also paid 16 billion rupees to hold restraint in eight months and ironic, although almost half of them were not recorded with the FBR, the sources said.
In the budget, the government had imposed 2.5% to retain the tax on traders in the hope that this would force them to come in the tax regime.
The increase in the rate helped to perceive 12 billion rupees more merchants, but the planned objective could not be achieved. The merchants have carried out the cost of additional tax to end consumers.
The government’s Tajir Dost regime to call on 10 million traders in the net has also failed and has now stopped talking about it. The government was supposed to collect 50 billion rupees among retailers as part of the program, but it ended up collecting peanuts.
The sources said that the FBR had admitted before the IMF that traders and jewelers were both hard nuts to break. The FBR also admitted before the IMF that is due to major design defects, the Tajir Dost program had failed.
The IMF was informed that large traders also prevented the smallest from joining the program and, therefore, it could not extend the regime to 43 cities. The FBR plan to bring a minimum of 10 million retailers in the net that had collapsed, was informed of the IMF.
The sources indicated that the Minister of Finance Muhammad Aurangzeb had asked the FBR to start the financial year to examine the taxation of the salaried class with the aim of relieving. However, no discussion of this type took place with the IMF.
Last June, the government considerably increased the tax burden of employees by reducing the number of slabs, which exercises an abnormal burden on middle and higher intermediate income groups. The maximum rate of 35% is now unjustly billed at RS500,000 monthly income and a 10% supplement is also imposed, which brings the total tax rate to 38.5% for the highest slab.
When the government did not feel the pain of employees, it tried to negotiate with the IMF to reduce the tax burden of the real estate sector. The IMF has not accepted the government’s request and has so far maintained the unchanged prices.
Details have shown that employees in the non -corporate sector have paid this year out of 141 billion rupees this year, which is higher by 42 billion rupees or 43%. Employees in the business sector paid 101 billion income tax, also higher of RS37 billion or 56%.
Employees of provincial governments paid 57 billion rupees, up 28 billion rupees or 96%. Federal government employees paid 34 billion rupees, once again higher by 14 billion rupees or 66%.
For the current financial year, the IMF has given an RS12.97 Billion tax objective to FBR, which has already supported 605 billion rupees to be won in eight months despite the collection of RS331 billion of employees.
For the month of March, the tax objective is 1.220 Billion of rupees that the FBR will again miss by a wide margin. Until Sunday, the FBR had collected 515 billion rupees, which leaves it with a gigantic task of generating 704 billion rupees during this week. Friday will be the last working day before the Eid holidays.
