Finance Minister Muhammad Aurangzeb on Tuesday acknowledged the “disproportionately high [tax] burden” on salaried individuals, indicating the need to rethink existing tax slabs.
“This is my personal view, that indeed on the salaried class side, there is a disproportionately high burden,” he said at an event organized by the Pakistan Business Council (PBC). “The reality is that we do need to think about the various tax slabs that we have. However, I cannot make any commitment about that,” he said, while stressing that the government wants to make the life of salaried individuals simpler.
He said the government was working to simplify the tax filing processes for the salaried class to reduce the need for accountants or tax advisers.
The minister emphasized his government was committed to staying firm on commitments made with the International Monetary Fund (IMF). “We are in a three-year Fund program and know where we are, what we have committed, and we are going to stay firm with those commitments,” he added.
Aurangzeb said the government has already started working on the federal budget for the next fiscal year to allow time for detailed discussions. He said consultations with business chambers would commence in February so the government could inform them what it could do for them and what it could not.
To a question, the minister said the government was willing to take a stance in some instances and create facilities. However, he stressed, there could be no compromise on documentation of the economy. He noted that Rs. 9.7 trillion cash was in circulation, adding the government must work to put the country on a sustainable path of growth.
“We have gone for stabilization, but there is no automatic switch from stabilization to growth,” he said, emphasizing that the government had “fundamentally changed” the DNA of the economy. “The [IMF’s] program is Pakistan’s program,” he reiterated, maintaining measures being taken under it were for the betterment of the country.
Aurangzeb said there was sufficient space for the State Bank of Pakistan to further cut the policy rate, adding this would improve business confidence. He said the central bank’s projection of reaching $13 billion in foreign exchange reserves by the end of the current fiscal year was a “very important milestone” that would help improve the country’s sovereign rating.
He further noted the government’s commitment to rightsizing, noting the ongoing abolishment of 150,000 vacant posts. On privatization of state-owned enterprises, he said the process for PIA would soon be relaunched with an aim to attract better offers.
On agriculture income tax, a key demand of the IMF, Aurangzeb said both Punjab and Khyber Pakhtunkhwa had already passed legislation to achieve this, while he hoped Balochistan and Sindh would soon follow.