WHENEVER one reads news items, attributed to a ‘source’, about the IMF’s recommendations to further tax salaried individuals, one always wonders why the Fund never singles out the tax exemptions given to military organisations like the FWO and NLC, or property tax exemptions given to residents of DHAs. One asks why the IMF is hell-bent on taxing salaried individuals, to the extent of pushing them into a state of chronic depression.
I got the answer to this question in a recent casual meeting with an official from the Fund itself. As per this source, the IMF never asks for the salaried class to be taxed; it only asks that tax revenues be increased. Connecting the dots leads one to the realisation that such news items are intentionally fed by the Government of Pakistan to shift the blame on the IMF for the weaknesses inherent in our system. The government lacks the power to tax the powerful sectors, and it all comes down to les misérables — the voiceless salaried class.
When, at a recent press conference, the finance minister was asked the reason for this, he replied that there was no magic wand and that nothing would change overnight. He said we would keep going back to square one unless the untaxed and undertaxed sectors of the economy were brought in the tax net.
This really sums up the fate of the nameless, faceless, voiceless salaried class for many years to come. It would take only one notification to tax the FWO; it would take only one notification to remove the exemption of tax on 500 square-yard houses in DHA, it would take only one day to make the pension expenses of military personnel a part of the defence budget. But the problem is that a lot would be done overnight if the finance minister adopted this course.
Salaried individuals are the easiest route to raising taxes.
Though I agree with the finance minister that salaried individuals are the easiest route to raising taxes, can he elaborate on any incentive, including amnesty schemes enjoyed by others, given to salaried individuals over the last couple of decades? Is there a scheme by the Government of Pakistan that gives individuals who cross a certain threshold in the amount of income tax deducted from their salary, privileges like getting preferential treatment at CMHes (they are the only reasonable hospitals in the public sector) or admission fee discounts for their children in public sector universities? The finance minister wants salaried individuals to make this sacrifice for the sake of the IMF deal but is not ready to introduce even a single small incentive for these individuals.
The middle and upper middle class, which is comprised mostly of salaried individuals in Pakistan, is the most unfortunate social class in the country. The poor have already given up on any ambition; this class, however, has ambitions and awareness as well. They know a lot and have too little. They are being decimated by government policies and don’t have any mechanism through which to fight back.
You may add value to your individual skills to earn a better living but the government has the final say in your earnings. It is better to be robbed by highway robbers, because at least you can complain about it and it is considered a crime by any court of law. Without getting into too many numbers, let’s try to answer a very simple question: has the standard of living of a person earning Rs5 million per annum improved in the last five years, or has it deteriorated drastically? The answer is a no-brainer; the said individual is finding it tougher and tougher to make ends meet because he has to afford a certain lifestyle.
Also, it is pertinent to point out that the riches of an individual working in the private corporate sector or finance sector — like our finance minister, who was president and CEO at a bank until a few months ago — is not the result of government incentives or favours by powerful quarters but his own hard work and many sacrifices by his family in terms of time. The government unabashedly robs a sizable chunk of his earnings and does not provide any incentive whatsoever — not even access to a social media platform like X. Maybe, even unblocking X.com cannot be done overnight?
Lastly, a few weeks ago, the Salaried Class Alliance of Pakistan requested the Supreme Court’s intervention in this unfair taxation through a suo motu notice. Truth be told, if your last resort is the Supreme Court in this country, then it is already a lost cause.
Salaried individuals in Pakistan are indeed an apt representation of the following line of Victor Hugo’s Les Misérables:“It is nothing to die. It is frightful not to live.”
The writer is a former civil servant.
Published in Dawn, August 8th, 2024
Dear visitor, the comments section is undergoing an overhaul and will return soon.