ISLAMABAD: A new “shadow budget” proposal has recommended significant tax reductions for salaried individuals, aiming to ease financial pressure and stimulate economic growth.
The think tank Economic Policy and Business Development (EPBD) has suggested reducing the maximum tax rate for salaried individuals from 35% to 20% in the upcoming fiscal budget. Additionally, it has proposed a tax exemption for individuals earning up to Rs80,000 per month.
The proposal outlines broader reforms across multiple sectors. For non-salaried individuals, the maximum tax rate is recommended to be reduced from 45% to 25%, while corporate tax is proposed to be lowered from 29% to 25% to help reduce business costs.
The think tank has also suggested gradually cutting the General Sales Tax (GST) from 18% to 15% over the next three years, a move intended to support consumers and businesses alike.
In the real estate sector, a sharp reduction in taxes—from 5.5% to 0.5%—has been proposed, along with the complete removal of the controversial Section 7E law. The policy further recommends offering incentives to overseas Pakistanis for remittances and investments, as well as easing documentation requirements for industrial investors.
To expand the tax base, EPBD has urged authorities to bring retailers, merchants, and vendors into the tax net. It also proposed structural reforms in the Federal Board of Revenue, including the creation of separate boards for income tax and customs, and appointing a qualified chairman for a fixed three-year term.
The think tank claims that if these reforms are fully implemented, Pakistan’s economic growth rate could reach 8.5% by 2031, with the country’s GDP potentially rising to $688 billion.
Additionally, it has called for urgent measures to resolve pending tax cases worth Rs5.7 trillion in courts, suggesting that timely resolution could significantly improve revenue collection and economic stability.
