Pakistan New Taxation Policy: Taxes Proposed for Low-Income Earners

Pakistan to Implement Progressive Taxation Policy to Bolster Revenue and Fiscal Stability

Pakistan is set to implement a progressive taxation policy that focuses on individuals with monthly incomes of 50000 rupees or lower in a bid to bolster its revenue collection and fiscal stability The move recommended by the World Bank aims to address economic disparities and enhance the countrys fiscal sustainability

Key Features of the New Taxation Policy

Taxation Restructuring Under the proposed policy individuals earning over five lakh rupees monthly will be subject to a 35 tax rate This measure is expected to generate substantial revenue for the government while reducing the tax burden on lowincome earners Moreover the federal government will refrain from allocating funds to sectors falling under provincial jurisdiction promoting greater financial autonomy among provinces.

Reevaluating the NFC Award In line with the World Banks recommendations Pakistan will conduct a comprehensive review of the seventh National Finance Commission NFC award This reassessment aims to ensure a fair distribution of financial resources between the federal and provincial governments aligning with the countrys evolving economic landscape.Incorporating Shopkeepers into the Tax System To broaden the tax base Pakistan plans to bring shopkeepers into the tax net This strategic move will ensure that small business owners contribute their fair share to the countrys economic developmentLowering the TaxFree Income Threshold The proposed policy also suggests.

lowering the threshold for taxfree income which will help increase revenue collection and contribute to Pakistans fiscal stability Simplifying Personal Income Tax Simplifying the structure of personal income tax is another key aspect of the new taxation policy By making the tax system more accessible and transparent Pakistan aims to encourage compliance and fair tax contributions .Agricultural Land Taxation The World Banks recommendations include imposing taxes on owners of agricultural land exceeding 12 acres This measure aims to redistribute wealth and promote equity in Pakistans tax system.

Overall Impact

Pakistans new taxation policy is expected to have a significant impact on the countrys economy The measures outlined above are aimed at generating additional revenue reducing economic disparities and promoting fiscal stability While some of the proposed measures may be unpopular among certain segments of the population they are essential for Pakistan to achieve sustainable economic growth