THE proposition by the International Monetary Fund (IMF) to double tax burden on both salaried and non-salaried classes, which may also include freelancers, warrants vehement opposition. This rec-ommendation, if implemented, would profoundly impact the middle and upper-middle-income groups, exacerbating their financial woes and further burdening an already strained populace.
The IMF proposal is not only unjust but also shortsighted. At the heart of this proposal lies a fun-damental injustice and that is targeting the very backbone of country’s economy — hardworking sala-ried class —that despite being most compliant taxpayers, find themselves in crosshairs of fiscal policy. The salaried class not only provides a steady stream of skilled labour and professional services to vari-ous industries but also constitutes the bedrock of economic stability through their consistent tax con-tributions, deducted at source by their employers.
However, singling out these individuals for in-creased taxation overlooks glaring disparities in the tax system. Astonishingly, while salaried class bears the brunt of tax obligations, sectors with significant income potential remain largely untaxed or under-taxed. The agricultural sector, accounting for a substantial 20% of the GDP, contributes less than 1% to total income tax revenue. Similarly, the real estate and wholesale/retail sectors exhibit alarming disparities between their economic contributions and tax remittances. The wholesale and retail sector alone, which according to recent reports contributes a staggering 18% to the GDP, merely contributes a paltry 3.9% to the national exchequer. This imbalance is not only unjust but also finan-cially unsustainable. Instead of burdening the already-strained salaried class, attention should be di-rected towards taxing these untapped economic veins, which have the potential to yield substantial revenue streams for the government. Furthermore, the timing of such a proposal could not be more inap-propriate due to soaring utility tariffs, escalating prices of essential commodities and an overall increase in the cost of living.
The salaried class finds itself grappling with shrinking disposable incomes and mounting financial pressures. Doubling their tax burden would not only exacerbate their financial distress but also dampen consumer spending and stifle economic growth — a perilous prospect for a country striving for socio-economic stability. Similarly, while reforms in the pension system are undoubtedly necessary to ensure its sustainability and adequacy for future retirees, imposing taxes on pensioners would be a grave injustice. Pensioners rely heavily on their pensions to meet their daily expenses, including cru-cial healthcare costs, especially in their twilight years. Taxing the pension would not only erode their financial security but also compromise their well-being and dignity. Rather than adopting regressive measures that disproportionately affect the middle and upper-middle-income groups, policymakers should reassess their approach and explore avenues that promote equity and fiscal responsibility. The incoming government must priorities tax reforms that target untaxed sectors.
