Income tax: What the salaried class will pay now

[313ghazi]

But even there govt funds are getting stretched ...GP’s & hospitals have a long waiting time ... Tory govts economic policy is devoid of ideas

I’v heard great things abt Scandinavian countries and of Germany and how they give their citizens great services - would be interesting to Pakistanis living there

I've got relatives in Sweden and Norway. They pay higher rates of tax than we do in the UK, but also get a lot more services back. I think a big part of the problem we face in the UK is the creeping corruption. Tories hell bent in privatisation, but sell to their friends, rather than the best buyers. Also the brown envelopes work in the UK too. Remember the fiasco with vodafone and their tax? The government offered them a better deal than even their accountants expected. No doubt someones relative will get a job on the board for vodafone at some point.

 

[S.Y.A]

You forgot the council tax, TV tax and so on.



Please understand that most of the money spent on education, health and pensions are collected as a separate tax. Council tax takes care of the street cleaning, garbage collection, school funding (most of it) and other community needs. NI (national Insurance - £137 billion collected) takes care of the Health system (NHS) and the pensions paid after the age of 65 at the moment which will go up to 68 in the coming years. So in short nothing is free. And this money is not even the tax money which is totally separate which @313ghazi mentioned above. The tax rate also goes up to 40% and 45% for the rich.... I don't have time to compare the two sides in detail right now. You know NHS budget is above £120 billion which is more than Pakistan's total tax collection (around £30 billion). NHS only serves around 63 million people. On the other hand Pakistan has to cater for around 210 million (it will require 3 times the funding of NHS to provide the type of facilities we have in UK). When you pay as much tax as people do in UK and don't get the services back then complain about it.... Please enlighten yourself to the figures below:
https://assets.publishing.service.g...e/802999/Apr19_Receipts_NS_Bulletin_Final.pdf

as someone above said, Chak Bamu I think, that your opinion is not relevant to the ground realities. those outside Pakistan need to realize that Pakistan isnt the west. our purchasing power isnt high, average monthly income of a graduate after working 5 years is somewhere around 60-80k (there are exceptions, but they are just that: exceptions), with the current alarming rise in prices and taxes, this is not enough. also, instead of raising the standard of living of the public the govt is actively suppressing it. they are making it so that none but the elite can possess a car, none but the rich can have an AC in their homes, none but the upper class can afford geysers and heaters.PAkistan's middle class will soon collapse if this continues, and with that the entire consumer based economy. phir tareefain karna PTI ki. Automotive sales have already taken a severe hit because of high prices, this trend will only get worse.

 

[VCheng]

also, instead of raising the standard of living of the public the govt is actively suppressing it. they are making it so that none but the elite can possess a car, none but the rich can have an AC in their homes, none but the upper class can afford geysers and heaters.PAkistan's middle class will soon collapse if this continues, and with that the entire consumer based economy.

Please keep in mind that Pakistan cannot continue to live beyond its means as a country. So something has to give.

 

[Wa Muhammada]

One can see clear dichotomy between people who live in Pakistan and those who live outside. Obviously people living outside of Pakistan have an opinion, but its not relevant to the ground realities.

These days I stay away from politics and economy sections. PDF is a nest of PTI supporters and the trouble one has to go to explain their folly is not worth the results. PTI government is providing free post-election education to its voters. Post-budget many have been wondering aloud about their choice in GE 2018.

As the grim realities set-in, I derive no pleasure from saying "I told you so" to my friends and family. Its going to get worse as corporations / businesses shed employees to slash expenses. Pakistan has proven to be an unstable and poor destination for FDI. Therefore, until some wealthy nation really needs Pakistan's services, there is little hope for improvement. I say this because the chances of real reforms are low. Those in power have no reason to make real reforms that would stick. PTI's government was installed by our Deep State and I can see that powers-that-be need not worry for their budgets & perks. So, apart from extracting more taxes from the usual channels, nothing else can or would be done.

For all those who would rather blame the last government, please study economics - especially Keynesian economics. For further study, read about attractive investment destinations and think if Pakistan would ever be one. If there is some free time - some of those who live and earn in Pakistan would be out of a job in the next two years and hence may have a lot of time on their hands - please study political science and Pakistan's constitution.

Really interesting post and on point.

The way things are going I can see Pakistan turning into a ‘Venezuela’ if the economy does not stabilise....A labourer earns 600rupees p/day in my city... imagine the effect on his earning with a slight increase in gas & electricity bills, hospitals have stopped providing free medicine, his transportation cost has increased, on top of that construction projects have stalled, so he gets less work...what does he do?

Re. The deep state / army

They won’t have a state at the rate we are going... was sitting with the owners of a building company in Multan and they said the current situation is this... we have ‘honest’ politicians in power who don’t know their job, whereas Nawaz Sharif and co. were corrupt but the economy was going up and up

 

[Baburfromsarmarkand]

People have to realise that nothing is happening in Pakistan that doesn't happen everywhere else in the world too. If you want a developed nation, you have to foot the bill for it, perhaps even more so whilst it's developing.

Firstly taxes have to come from somewhere. If the country does not have many businesses who don't make much profits, then there is only so much you can tax them. In this budget businesses are also being taxed. The salaried class are stuck, so they have to pay taxes.

The salaried class i do feel for, i am a part of the same class, and we're the only people who can't escape paying taxes. Everyone else can swindle, we can't. But that doesn't mean we should stop paying taxes too, rather the system should make it harder for everyone else to swindle. Criticism of the lack of growth in the tax net is legitimate and should continue until the tax net widens. There are plenty of people with more means than salaried people who are escaping paying taxes.

Having said that, the tax rates are very reasonable. In the UK the base rate is 20% of salary, plus an additional 12% specifically for healthcare and pensions.

On top of that we pay duty in cigarettes, alcohol, fuel. We also pay sales tax on everything at 20% apart from on kids clothes, books and motorcycle helmets.

The real economic challenge for this government is to increase the tax net and reduce indirect taxation, like sales tax on essential items, or taxes on energy and fuel. Income tax is not unfair, the indirect taxes on essentials are unfair. Those have to be paid regardless of whether you can afford to or not.

Governments don't create wealth or prosperity. Private individuals do. When there are less taxes and regulations more investment money. Pakistan has been protecting some rent seeking industrialists for decades. Hence you will never see the level of competition that leads to progress.
Governments never create wealth without force (British Raj) . Never. Give them your money. Won't make any difference. It will go to loan payments you or Me had nothing to do with or no benefit from.

 

[S.Y.A]

Please keep in mind that Pakistan cannot continue to live beyond its means as a country. So something has to give.

People like these should "give":
https://lhc.gov.pk/system/files/Pay-HCJ-J.pdf

not the middle income group.

The restaurant owners of Isb threatened to strike, and the FBR backed off, what the f*** was that? same thing with automotive industry. they dont have the balls to implement meaningful changes and reforms, and can only burden those who are already paying.

What would arresting the likes of zardari and nawaz achieve? what matters is that they cough up the money, there is no sign of getting that back. again, PTI govt doesnt have the balls to do that.

 

[VCheng]

People like these should "give":
https://lhc.gov.pk/system/files/Pay-HCJ-J.pdf

not the middle income group.

The restaurant owners of Isb threatened to strike, and the FBR backed off, what the f*** was that? same thing with automotive industry. they dont have the balls to implement meaningful changes and reforms, and can only burden those who are already paying.

What would arresting the likes of zardari and nawaz achieve? what matters is that they cough up the money, there is no sign of getting that back. again, PTI govt doesnt have the balls to do that.

The problem lies in the numbers. There are many more people in the middle class that add up to a lot of revenue as opposed to only a relatively few rich people. Making a few criminals give up a few billion one time would not create a sustainable taxation structure.

 

[darksider]

People are angry because the ones who should have opened their tax account for the first time remain outside the tax network. And the same majority who has been bearing the burden for years has been targeted again, this time without even paying any attention to the sufferings. So all those slogans of "change will happen" were mere hogwash and hypocrisy. Mafias are still successful in blackmailing the state and getting their desired results.

Bhai sahab dhoka ho gaya hum sey phir.
Same wahi gorakh danda hey bas naam badal gaye hain.

 

[Wa Muhammada]

That's not quite right. Expats are the reason the families of expats aren't living like Afghans. It's true there is a trickle down in the sense that our families who we support then engage in the economy, but realistically it's supporting them. It's unfortunate so many people have travel to foreign lands to find opportunities to support them.

I'd actually like to hear the opinions of people who've lived abroad and then migrated back to Pakistan and are there now. What do they think? They have seen both sides of the picture.

I think those days are gone when when low skilled Pakistanis would go to the ‘west’ to make a living for their families..... that concept is dying because visa regulations have become tougher and less and less British Pakistanis are marrying back home.

Most of our expats are in the Middle East but one of the biggest host countries (Saudia) has thrown most of them out, which has meant a reduction in foreign remittances here.

 

[Kaniska]

Do you really think that a person earning 1 lac per month shouldn't pay 2500 tax when he paid 5000 tax in 2018. And person earning 50K per month shouldn't pay zero tax when in 2018 he paid 600?

Actually i find it quite low than other countries in South Asia..In India, i beleive we pay much more if we earn 100000 per month..:
In that way, 2.5% is a resonably less tax for salaried class

 

[VCheng]

I think those days are gone when Pakistanis would go to the ‘west’ to make a living for their families..... that concept is dying because visa regulations have become tougher and less and less British Pakistanis are marrying back home.

Most of our expats are in the Middle East but one of the biggest host countries (Saudia) has thrown most of them out, which has meant a reduction in foreign remittances here.

But remittances overall continue to rise, not fall.

 

[Wa Muhammada]

But remittances overall continue to rise, not fall.

Are these official figures or fudged figures provided by PTI?

 

[VCheng]

Are these official figures or fudged figures provided by PTI?

You can see for yourself:

https://tradingeconomics.com/pakistan/remittances

 

[I.R.A]

Actually i find it quite low than other countries in South Asia..In India, i beleive we pay much more if we earn 100000 per month..:
In that way, 2.5% is a resonably less tax for salaried class

You have to take into consideration the impact on overall purchasing power. INR is stronger than PKR.

Plus in our Mehran's price you can buy two Marutis I guess.

 

[Chak Bamu]

That's not quite right. Expats are the reason the families of expats aren't living like Afghans. It's true there is a trickle down in the sense that our families who we support then engage in the economy, but realistically it's supporting them. It's unfortunate so many people have travel to foreign lands to find opportunities to support them.

I'd actually like to hear the opinions of people who've lived abroad and then migrated back to Pakistan and are there now. What do they think? They have seen both sides of the picture.

Four words: I made a mistake.

I could go back any time I want, but I just love Lahore too much. But it seems continuing to live in Lahore is no longer an option for me & my children. As unemployment and disillusionment increase, follies of our election engineers would bite in increasingly bigger chunks.