Pakistan is facing a tough wave of extreme inflation

Written by Usman Asif

Oct 30, 2023

October 30, 2023

Pakistan is facing a tough wave of extreme inflation. It’s touching everyone deeply, especially the middle class, salaried employees, and their families. Simple daily needs like wheat, sugar, and electricity have become so expensive that many working folks can’t afford them. For instance, the cost of an electricity unit has jumped to PKR 50/unit for the highest users. Shockingly, 30% of that is just tax.

It’s bewildering that during such hard times, the government chose to place more pressure on the already struggling salaried workers. Sectors like agriculture, real estate, and retail are hardly taxed at all. Meanwhile, the salaried class paid a whopping Rs264.3 billion in taxes – that’s twice as much as what exporters and retailers pay together! And while agriculture makes up over 22% of our economy, its tax contribution is less than 1%.

I’m not saying farmers should be taxed more, but larger businesses and landlords should definitely contribute their fair share. Currently, a professional in the middle of their career loses almost half of their earnings to taxes. I have a sinking feeling that the government is targeting salaried workers because they won’t protest. These employees don’t have powerful unions to fight for them. Plus, since their tax is deducted directly from their salaries, it’s an easy cash grab for the government.

This strategy might bring in money now, but it’s a ticking time bomb for Pakistan’s future. Our services sector makes up about 36% of our GDP. If we want to grow, we need skilled professionals. But high taxes are pushing them away, causing a massive brain drain. To sum up, the tax situation in Pakistan has been imbalanced and in need of attention. However, the recent additional taxes have only exacerbated the situation. I now understand why some are opting to leave the country. Even though we’re only halfway through 2023, around 800,000 Pakistanis have already emigrated this year. Among them, at least 100,000 are highly skilled professionals, including doctors, nurses, engineers, IT experts, and accountants, as reported by WION News. While emigration might be a solution for some, it’s not feasible for everyone.

On a brighter note, it’s heartening to see Small & Medium IT Enterprises getting some tax relief. This change can boost these businesses and create more jobs. However, speaking from Devsinc’s perspective, if faced with a choice between taxing IT businesses or salaried workers, I’d advocate for taxing Devsinc more and giving relief to the employees. After all, we, or any growing business for that matter, cannot thrive without our skilled workforce. I sincerely hope the government listens to the concerns of the Salaried Class as we clearly need a tax system that is fair and sustainable for everyone.

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