Last Updated on: 11th July 2023, 05:52 am
IMF Calls On The FBR To Increase Tax Burden On Salaried Class
Federal Board of Revenue (FBR) Chairman Asim Ahmad admitted on Tuesday that the International Monetary Fund (IMF) has rejected the 47 billion rupees in tax breaks granted to the working class by the Finance Bill 2022.
Speaking to the media in Parliament, Ahmad said the FBR will now propose changes to the tax brackets as the government has no choice but to approve the IMF’s proposal. He said the FBR is drafting various model tax brackets for wage earners to reduce the Rs 47 billion tax break announced in the budget.
The President of the FBR said there was a disagreement between the IMF and the government on personal income tax rates. The current proposal is not acceptable to the IMF. He said the government does not want to burden low-income people. However, if we don’t collect taxes for low-income people, our revenues wouldn’t be positive, he added.
He said the government should give tax breaks to the low-wage class because the cost of living is so high due to inflation. We must mitigate low wages at all costs, he said.
The government had proposed exempting those earning up to Rs 100,000 per month from the previous limit of Rs 50,000 per month from paying income tax in the fiscal year 2022-23 budget. Also, the 12 records were reduced to seven.
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The FBR chairman added that most people fall in the pay bracket of up to Rs 200,000 per month. The total number of taxpayers in the upper classes is so small that a doubling of tax rates would not have a significant impact on working-class incomes.
“We cannot impose ridiculously high tax rates like 75% instead of 35% on high earners, while the lower income base is very broad, which affects tax collection,” he explained.
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