Govt mulls rolling back income tax relief in mini-budget

ISLAMABAD: Bitten by a shortfall in tax revenues, the Pakistan Tehreek-e-Insaf (PTI) federal government is considering a rollback of the income tax relief given to the salaried class by the previous government, sources told Geo News on Friday.

In its last budget shortly before general elections in July 2018, the Pakistan Muslim League-Nawaz (PML-N) government had announced large tax cuts that included an upward revision of the minimum taxable income for salaried class to Rs1.2 million per annum.

According to sources privy to the developments, officials have proposed to the federal cabinet to revise the minimum threshold down from Rs1.2mn to Rs0.6mn or Rs0.8mn.

Sources said the tax cuts have so far resulted in the government facing up to Rs25 billion in revenue collection losses, and officials are currently in the process of advising the cabinet on how to reduce the shortfall in coming months. The sources further told Geo News that, on the back of rising inflationary pressures, even if the cabinet rejects the proposal in the upcoming January 23 supplementary budget, it is likely to take it up in the next annual budget. The federal cabinet is yet to take a final decision on the matter.

According to reports, the government is faced with an erosion of the tax base due to the previous government's tax cuts as well as the Supreme Court's decision to suspend collection of tax on mobile phone cards.

However, Finance Minister Asad Umar has rejected the impression that the mini-budget later this month would be loaded with new taxes, arguing that it would instead focus on ease of doing business and steps to uplift trade and industrialisation.