Salaried class demands meaningful relief in Finance Bill

KARACHI: Pakistan’s salaried class has expressed concern over the proposed measures in the Finance Bill 2025-26, which continue to disproportionately burden compliant taxpayers, a statement said on Thursday.

In the past six years, the tax contribution from the salaried class has surged from Rs76.44 billion in 2018-19 to a projected Rs550+ billion in FY 2024-25, marking an increase of nearly 719 per cent. However, this rise does not accurately reflect income growth; instead, it is largely a result of inflation, the lack of indexation, and the removal of essential tax credits related to education, insurance, and investments.

The salaried segment, which has taxes deducted at source and maintains thorough documentation, faces several punitive policies. These include exorbitant taxes on pension funds that particularly penalise retirees with modest non-pension income, an increase in taxes on mutual fund and bank profits that discourages regulated savings and long-term investments, and a continued 10 per cent surcharge on high-earning individuals, while informal and undocumented sectors remain largely unaddressed.

Despite public commitments to provide relief, the current proposals fall short. Key reforms are urgently needed: raising the tax-free salary threshold to Rs100,000 per month, adjusting for inflation; restoring previous slab rates, which would reduce the top slab rate from 35 per cent to 32.5 per cent and decrease the second-highest slab from 30 per cent to 27.5 per cent; maintaining the tax rate for the lowest slab at 1.0 per cent as stated in the budget speech; reinstating tax credits for insurance, education, and investments; withdrawing the 10 per cent surcharge; and ensuring equitable treatment for all taxpayers while expanding

he tax net to include the largely untaxed wholesale, retail and agricultural sectors. Bank profits, discouraging regulated savings and long-term investment; continued 10 per cent surcharge on high-earning individuals, while informal and undocumented sectors remain largely untouched.

While the 2.5 per cent slab rate reduction and minimal surcharge cut are noted, they are far from sufficient. The salaried class is not asking for favours -- only fairness. Policymakers are urged to show compassion and take corrective action before finalising the Finance Bill. A just tax policy is essential to restore public trust, prevent brain drain and secure Pakistan’s economic stability.