Last Updated on: 16th July 2023, 04:00 pm
Employees Protest Across The Country Against High Taxes in The Budget 2023
The working class has launched a campaign against high taxes on wage earners under the Finance Bill 2023.
With this in mind, the working class launched a nationwide campaign under the slogan “Save the Working Class”.
In a letter to Treasury Secretary Ishaq Dar, the representative expresses concerns about the recent introduction of additional direct tax measures for the working class. In particular, the letter discusses the 2.5% tax hike and changes in income brackets.
These changes have had a serious impact on the financial burden on employees, the letter said.
“The above increase comes on top of the exorbitant tax burden already passed on to the working class by the Finance Act 2023, which not only significantly increased tax rates but also eliminated several tax credits,” he added.
The working class is already grappling with the harsh reality of high inflation, rising GST, high oil taxes, rising energy costs and limited job opportunities. The proposed tax rate hike and change in income brackets will significantly reduce your net disposable income and put more pressure on those who are already struggling to make ends meet.
Therefore, the proposed changes will have a serious impact on the workers’ group.
The letter goes on to say, “Furthermore, the significant devaluation of the Pakistani rupee against major currencies has resulted in a significant drop (more than 50%) in the purchasing power of the wage class to run their household.”
He further added: “It is important to note that private sector workers, who make up the majority of the labor force, have not seen wage increases that have accompanied rising unemployment and inflation rates.”
On the contrary, the incomes of government employees and some sectors increased, exacerbating income inequality between different sections of society.
Unlike companies in the corporate, industrial, commercial and service sectors, employees cannot deduct their expenses from their income, further limiting their ability to manage their finances effectively.
It should be noted that in the previous budget the government eliminated tax protection for investments, which increased their financial burden. In addition, the main reimbursable expenses of the pay grade were also eliminated in previous budgets.
As a result, the tax burden on the working class has increased significantly in a short period of time, leading to serious financial difficulties. The effective tax rate of the income class is the highest of all sources of income.
The working class has urged the government to explore alternative ways of generating tax revenue, such as targeting wholesale and retail trade, which accounts for 18% of GDP but whose tax contribution remains disproportionately low at just 1%. Other sectors also do not contribute enough to tax revenue in relation to their share of GDP.
“There are legal issues with bringing these sectors of the economy into the tax net, but crowding out the sector of the economy that already pays taxes is a gross injustice to a single sector.”
“The implementation of fair tax measures in all sectors would ensure a fairer distribution of the tax burden,” the letter said.
“The working class consists of law-abiding citizens for whom integrity is a core value. You do not participate in the generation of illegal income. However, persistently high inflation, which has hovered around 38% for several months, has further exacerbated their financial difficulties, making it increasingly difficult for them to meet their basic needs,” he added.
“In light of these concerns, we are urging the Treasury Secretary to reconsider proposed tax measures and provide workers with much-needed relief by restoring deductible allowances when calculating their taxable income. This would help ease their financial burden and promote a fairer tax system,” the letter continues.
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