Islamabad [Pakistan], Pakistan's parliament on Friday passed a high-tax finance bill for the next fiscal year amid ongoing negotiations for a new bailout from the International Monetary Fund (IMF).
However, experts have criticized the flawed tax system, citing its contribution to widening economic disparities and increasing financial burdens on the population.
Crisis-ravaged Pakistan continues to struggle to maintain a low tax-to-GDP ratio, with the budget setting an ambitious target of collecting 13 trillion tax dollars in Pakistani currency (PKR).
The complex tax structure imposes significant compliance burdens on both businesses and individuals.
Allauddin Khanzada, an expert, commented: "While wages have increased by 20 to 30 percent, inflation has soared by 200 to 300 percent, pushing many below the poverty line. The class Media, once a buffer, has shrunk. Today, Pakistan appears divided between the rich and the impoverished."
Pakistan is currently negotiating with the IMF for a bailout package ranging between PKR 6 and 8 billion, aiming to avoid an economic default in a region experiencing its slowest growth.
The tax increase target includes a 48 percent increase in direct taxes and a 35 percent increase in indirect taxes. Non-tax revenue, particularly from oil taxes, is expected to increase by 64 percent.
"We pay taxes on essential goods like electricity, water and even basic items like tea and matches. Despite this, the government claims that tax compliance is inadequate. We are unfairly labeled as non-filers," Khanzada added. "The current tax system is outdated and exacerbates disparities between rich and poor."
Critics argue that Pakistan's new tax-laden budget exacerbates economic disparities and places a burden on the population, amid ongoing negotiations with the IMF to avoid a financial crisis.
However, experts have criticized the flawed tax system, citing its contribution to widening economic disparities and increasing financial burdens on the population.
Crisis-ravaged Pakistan continues to struggle to maintain a low tax-to-GDP ratio, with the budget setting an ambitious target of collecting 13 trillion tax dollars in Pakistani currency (PKR).
The complex tax structure imposes significant compliance burdens on both businesses and individuals.
Allauddin Khanzada, an expert, commented: "While wages have increased by 20 to 30 percent, inflation has soared by 200 to 300 percent, pushing many below the poverty line. The class Media, once a buffer, has shrunk. Today, Pakistan appears divided between the rich and the impoverished."
Pakistan is currently negotiating with the IMF for a bailout package ranging between PKR 6 and 8 billion, aiming to avoid an economic default in a region experiencing its slowest growth.
The tax increase target includes a 48 percent increase in direct taxes and a 35 percent increase in indirect taxes. Non-tax revenue, particularly from oil taxes, is expected to increase by 64 percent.
"We pay taxes on essential goods like electricity, water and even basic items like tea and matches. Despite this, the government claims that tax compliance is inadequate. We are unfairly labeled as non-filers," Khanzada added. "The current tax system is outdated and exacerbates disparities between rich and poor."
Critics argue that Pakistan's new tax-laden budget exacerbates economic disparities and places a burden on the population, amid ongoing negotiations with the IMF to avoid a financial crisis.