The World Bank has retracted its statement regarding taxing those with salaries less than Rs. 50,000 a month.
According to a report in Tribune, fresh data indicates that the salaried class in Pakistan paid more taxes than those paid by the country’s richest exporters and real estate sector combined in the last three months.
For context, the salaried individuals in Pakistan paid Rs. 71 billion in taxes during the period, Rs. 6 billion more than the taxes paid by the exporters and real estate sector. The higher contribution by the salaried class is despite the fact that the income of exporters and the real estate sector is much higher.
The World Bank’s clarification said that its suggestion of slapping taxes on those earning less than Rs. 50,000 a month was based on data from 2019 which needs to be updated.
“The World Bank certainly does not recommend any reduction in the current nominal threshold, and how it was framed above may have indeed been misleading,” said a WB spokesperson.
“Previous analysis included in the Public Expenditure Review using 2019 data suggested that a reformed income tax structure could include a lower exemption threshold for salaried individuals, but this analysis would need to be updated to take account of recent inflation and labor market changes to make sure low incomes are not affected,” the statement added.
Accepting the mistakes, the Bank said that “the recommendation in the Pakistan Development Update should have been clearer on the need for new analysis needed on more recent data to inform this reform.”
It further said that appropriate changes to tax thresholds should be assessed based on new survey data and designed to protect low incomes.
Source: Pro Pakistani