The World Bank has made a clarification regarding its earlier statement on taxing individuals with salaries less than Rs. 50,000 a month in Pakistan. The bank stated that its initial suggestion was based on 2019 data, which now needs updating to account for recent changes in inflation and the labor market.
Recent data revealed a surprising fact: the salaried class in Pakistan contributed more in taxes over the last three months than the combined tax contributions of the country’s wealthiest exporters and the real estate sector. Despite having lower incomes compared to these sectors, salaried individuals paid Rs. 71 billion in taxes, which is Rs. 6 billion more than what exporters and the real estate sector paid.
The World Bank acknowledged the need for new analysis based on current data and emphasized the importance of ensuring that any changes to tax thresholds protect individuals with low incomes. They also admitted that their previous recommendation should have been clearer about the necessity for updated analysis.
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