FBR chairman explains importance of increase in tax rates for salaried people

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The Federal Board of Revenue (FBR) Chairman Asim Ahmad Saturday said the net revenue impact of the taxation measures taken in the federal budget (2022-23) is expected to be increased from Rs355 billion to Rs480 billion following a rise in the income tax rates for salaried class of Rs125 billion for 2022-23.

At the conclusion of the Senate Standing Committee on Finance, the FBR Chairman said that the figure of the revenue measures would obviously go up following changes in the tax rates of the salaried class through the amended Finance Bill 2022. However, it depends upon the final estimates of the figure projected from Personal Income Tax reforms.

The issue involved in the taxation of the salaried class is not revenue generation, but reform of the income tax slabs. It is very easy to impose additional taxes of Rs125 billion on other sectors, but the issue involved is to reform the structure of the tax slabs of the salaried class. Since 2019, the Personal Income Tax reforms were pending and were deferred every year due to one reason or the other. Now, the tax slabs are being adjusted in such a manner to ensure minimum burden on the lower brackets of the salaried class, the FBR chairman added.

When asked whether the FBR can generate additional taxes of Rs125 billion from tobacco, steel, beverages, and other potential sectors, Asim responded that the issue is not to generate additional revenue from the salaried class but to reform the tax slabs of the salaried individuals falling under different brackets.

“This is not the demand of the IMF to only increase revenue from the salaried class, but to introduce reforms in the personal income tax regime,” the FBR chairman added.

The government has taken taxation measures of Rs440 billion and enforcement measures of Rs200 billion in the budget (2022-23) to meet the annual target of Rs7,004 billion.

Total taxation measures have been proposed at Rs440 billion for 2022-23. Around 75 percent of the taxation proposals are related to direct taxes. The total relief measures stood at Rs85 billion.—Agencies