Get the latest news and updates from Dawn
The government must stop shifting the cost of weak revenue mobilisation onto households and the corporate sector and instead offer targeted tax relief to offset the burden imposed in recent years, including a reduction in the petroleum levy. While support for the most vulnerable remains necessary given high poverty levels, sustained job-creating growth is vital.
It is unreasonable to tax a monthly income of Rs50,000, which falls below the amount required for a family’s subsistence. To make the tax regime more logical and equitable, the income tax threshold should be raised to Rs1.5 million per annum (Rs125,000 per month) from the current Rs600,000. The tax slabs and rates should then be recalibrated accordingly to preserve progressivity while providing meaningful relief to low-income earners.
At the same time, there is little justification for imposing a super tax on the already compliant corporate sector while large segments of the economy — including many services, retail and wholesale trade, real estate, and farm landowners — continue to remain undertaxed or effectively enjoy a tax holiday.
With inflation once again edging upward, the persistently high petroleum levy is adding to the cost pressures across the economy. The levy needs to be rationalised and gradually reduced to levels comparable with regional averages to provide much-needed relief to consumers and businesses alike.
