Pakistan Budget: Income Tax Hike Sparks Concern
The proposed budget for 2025-26 has introduced several new taxes, including an 18% sales tax on imported solar panels and a 2% tax on online shopping. The government's approach to taxation has been criticized for increasing the tax burden on registered taxpayers without introducing any reform measures or strategic changes. The budget's failure to address the country's fiscal malfunction and economic non-viability has sparked concerns among citizens and economists alike.
The government's proposed budget for 2025-26 has introduced several new taxes, including an 18% sales tax on imported solar panels and a 2% tax on online shopping, sparking concerns among citizens and economists alike. Finance Minister Muhammad Aurangzeb has warned that the government may impose up to Rs500 billion in new taxes if the National Assembly does not pass a law to ban economic transactions by ineligible persons.
The budget has been criticized for increasing the tax burden on registered taxpayers without introducing any reform measures or strategic changes. The government claims to be trying to boost exports, but this proposal is unlikely to be successful. The budget also introduces a new tax on teachers and professors, and increases the tax on students' school supplies. Meanwhile, the minimum monthly wage remains unchanged at Rs37,000, while parliamentarians' salaries are set to increase annually.
The finance minister has emphasized the significance of tariff reforms under the National Tariff Policy, asserting that reducing import duties would move Pakistan toward an export-led economy. However, the government's approach to taxation has been reduced to clever gimmicks to squeeze more revenue from registered taxpayers. The government has invented new categories of taxpayers, such as non-filers and deemed income, and has introduced amnesty schemes and penalties to try and get recalcitrant non-filers to register and pay taxes.
The budget has been described as an "elephantine mediocrity" that fails to address the country's fiscal malfunction and economic non-viability. The government's inability to drive any change is taking the state deeper and deeper into non-viability, as it is forced to squeeze more from less and borrow the remainder. As the country struggles to find a way out of its economic woes, the proposed budget has sparked concerns among citizens and economists alike.