Prime Minister Orders Work on Tax Relief
Pakistan has begun preparing a tax relief package for salaried workers. The move follows a clear directive from Prime Minister Shehbaz Sharif. He asked officials to create proposals that reduce the burden on people who pay taxes directly through their monthly pay.
FBR Chairman Rashid Mahmood Langrial shared the details during a Pakistan Business Council seminar in Islamabad. He said the prime minister wants a fairer system for workers who face rising living costs and limited disposable income. A related update on how income tax slabs have been revised for salaried workers can be found here: Income Tax Relief for Salaried Class Revised Again on PM’s Directive. Many employees say they carry a large share of the tax load because their earnings are easy for the state to track and deduct.
Government sources suggest that some changes could appear in the next federal budget. The idea is to bring relief without creating pressure on Pakistan’s fragile finances.
Government Reviews Super Tax on Big Business
Langrial also said the government is reviewing the super tax on major companies. This tax was introduced as a temporary measure to stabilise public revenue. Over time, however, it became a significant burden on sectors such as banking, energy, cement, and telecommunications.
Business leaders argue that the super tax hurts investment. They say it reduces profits, delays expansion plans, and limits global competitiveness. The government has now started consultations to decide how to reduce the tax in stages.
Some industries have faced an effective tax rate above 45 percent in recent years. Analysts say such high rates place Pakistan among the more expensive corporate environments in South Asia. Reducing the tax could help build business confidence and attract new investors.
Need to Expand the Tax Net
Langrial stressed that long-term relief depends on expanding the tax network. He said a wider base allows lower tax rates for everyone already paying. Pakistan has around 4.3 million active taxpayers, which is very low compared to a population of over 240 million. Because of this gap, the government often relies on indirect taxes and higher rates on compliant groups.
Pakistan’s tax-to-GDP ratio stands near 9 to 10 percent. This is one of the lowest in the region. International lenders, including the IMF, have asked Pakistan to target sectors that remain outside the formal tax system. These include retail, real estate, and agriculture. Many of these areas resist documentation and formal reporting.
Langrial said more taxpayers would reduce the load on both salaried workers and businesses. He also highlighted the need for stronger enforcement and better digital systems to track economic activity.
Phased Withdrawal of the Super Tax
The FBR chairman said the government is ready to reduce the super tax in phases. He noted that a complete withdrawal is possible but must happen responsibly. Pakistan is still meeting strict revenue targets under an IMF programme. Any sudden drop in income could risk financial stability.
He said stable policy is important for the business climate. However, the state must balance relief with revenue needs. The government is therefore considering a step-by-step approach that eases the burden without creating fiscal shortfalls.
What Comes Next?
Economists say tax reform is critical for Pakistan’s long-term recovery. Relief for salaried workers may provide quick comfort to millions. Yet broader reforms, such as expanding the tax net and lowering heavy corporate taxes, are essential for future growth.
The government is expected to announce more details in the coming months. Until then, businesses and workers will watch closely. Many hope the coming reforms deliver real relief rather than temporary adjustments that fade over time.
This renewed focus on fairness, compliance, and economic stability could shape Pakistan’s fiscal policies for years to come.
