Relief for salaried class must stay on the table

May 18, 2025

As the government prepares the federal budget 2025-2026, virtual talks with the International Monetary Fund (IMF) are underway. During these discussions, the IMF has raised objection to a government proposal to reduce income tax for the salaried class. The government had suggested lowering taxes on salaried people to ease their financial burden. But the IMF believes this move could widen Pakistan’s already large tax gap. It has asked the country to raise an extra Rs700 billion in revenue through better tax enforcement and reforms. Currently, the Federal Board of Revenue (FBR) is struggling to meet its collection target of Rs13.2 trillion. The new target for the next fiscal year is an even higher Rs14.3 trillion. This has put pressure on the government to make tough decisions. The Ministry of Finance says that no final decision has been made yet about giving tax relief to salaried workers. But this segment, which regularly pays taxes through monthly deductions, should not be punished for the failures of others.

Instead of burdening those who already pay their share, the FBR must widen the tax net. There are many people and businesses in Pakistan who earn well but do not pay taxes. These groups must be brought into the system. Meanwhile, the Pakistan Stock Exchange saw a sharp rise recently, with the KSE-100 Index gaining over 1400 points. Experts link this to positive IMF developments, including the approval of $1 billion in funding and another $1.4 billion under the Resilience and Sustainability Facility.

While financial support from the IMF is important, real progress depends on fairness at home. The salaried class deserves support, not more stress. Tax relief for them must stay on the table — and the focus should shift to those who pay nothing at all.