Pakistan is seeking major tax relief as high taxes continue to hurt investment and slow economic growth. Officials argue that strict IMF rules restrict policy changes and block recovery. They say growth cannot return unless tax pressure eases. Business leaders also warn that excessive taxes punish compliant sectors while large areas stay untaxed. This growing demand for tax relief reflects deep frustration across the economy.
Tax revenue has increased under IMF oversight, but the tax base has not expanded. Agriculture, real estate, retail, and many service providers still avoid taxes. As a result, salaried workers and formal companies bear most of the burden. Direct taxes now make up nearly half of total taxes. Corporations are believed to pay about 65 percent of direct taxes, while a small group of salaried workers contributes far beyond its share.
READ MORE:Salaried class likely to get tax relief in budget after IMF approval
The government has proposed a Rs975 billion tax relief package to support investment and create jobs. Officials say high taxes remain the biggest obstacle to new projects. The plan includes major cuts for companies and individuals, along with lower sales tax and reduced super tax. However, the package requires IMF approval before implementation. Advisors say the government needs flexibility on the primary-surplus target to move ahead.
Experts warn that the package heavily favors companies, not workers. The proposed salary-tax cut offers only Rs30–40 billion in relief. Corporate taxes would fall much more sharply. Business leaders still support the broader changes, arguing that Pakistan’s system forces compliant taxpayers to carry the entire load. They say high taxes under the IMF program push investors away, destroy jobs, and drive skilled workers abroad.
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Economists argue that sustainable growth requires predictable taxes, lower rates, and stronger confidence. They urge the government to cut spending, privatize state enterprises, and phase in tax relief over several years. They also stress that salaried workers must receive immediate relief to slow emigration and restore trust. Without decisive action, Pakistan will struggle to revive growth or fix its fragile economy, making tax relief essential for progress.