Daily Times

The Salaried Class Alliance of Pakistan has petitioned the Supreme Court against what it calls “unfair” taxes imposed on workers under the budget 2024-2025 that came into effect today, Monday, according to a copy of the document seen by Arab News.

The government presented the national budget on June 12 with a challenging tax revenue target of 13 trillion rupees ($46.66 billion) for the year starting July 1, up about 40 percent from the current year, to strengthen the case for a new rescue deal with the International Monetary Fund (IMF). Parliament on Friday passed the finance bill, which has increased the tax liability by Rs22,500 for all persons earning more than Rs50,000 a month. Last year also the government had imposed a higher income tax on salaried persons it deemed “high earners.”

“The salaried class, already strained by high inflation and inadequate services, faces escalated tax rates without corresponding benefits or relief measures,” the union’s petition to the top court read. “The government’s approach neglects opportunities to broaden the tax base by targeting non-filers and the informal sector, crucial for equitable taxation.”

The petition said increased taxation would contribute to the brain drain of skilled professionals and capital flight, which were detrimental to Pakistan’s economic growth and stability, while also highlighting the practice of unjust taxation given the discrepancies in tax treatment for private sector salaried individuals and other sectors like government workers.

The petition called on the court to encourage measures to enforce taxation on non-active taxpayers and informal sectors.

“Request the Supreme Court’s intervention through Suo moto notice to review the constitutional validity and fairness of the tax measures proposed in the Finance Budget 2024-2025,” the petition said, outlining proposed actions for the court.

“We appeal to the Honorable Court, under Article 184(3) of the Constitution of Pakistan, to uphold justice and protect the rights of the salaried class and all taxpayers in Pakistan. The current taxation policies threaten economic stability and fairness. We seek your urgent attention and intervention to ensure that taxation policies align with principles of equity, economic growth, and national development.”

The rise in the Pakistan government’s tax target is made up of a 48 percent increase in direct taxes and a 35 percent hike in indirect taxes over revised estimates of the current year. Non-tax revenue, including petroleum levies, is seen increasing by 64 percent. The tax would increase to 18 percent on textile and leather products as well as mobile phones besides a hike in the tax on capital gains from real estate. Workers will also get hit with more direct tax on income.

Opposition parties, mainly parliamentarians backed by the jailed former Prime Minister Imran Khan, and major trade bodies have rejected the budget, saying it will be highly inflationary and lead to industry shutdowns. On Monday, a main religious political party, the Jamaat-e-Islami, announced it would hold a sit-in in Islamabad against taxes and inflation from July 12.

Pakistan’s central bank has also warned of possible inflationary effects from the budget, saying limited progress in structural reforms to broaden the tax base meant increased revenue must come from hiking taxes.

The upcoming year’s growth target has been set at 3.6 percent, with inflation projected at 12 percent.