‘Increase in minimum taxable income good for salaried classes’

KARACHI: To ease the problems of the salaried class, the government has increased the minimum annual taxable income to Rs300,000 from Rs200,000 in the budget for the new fiscal year announced on Saturday.

From now on, only people earning over Rs25,000 per month, would be liable to pay income tax. Last year and before that the people earning less than Rs20,000 per month were not taxed.

Also, for non-salaried class tax payers, government has raised the minimum annual taxable income to Rs30,000 from Rs10,000.

“The government move to increase minimum annual taxable income is good for the salaried class,” Ali Danish, an employee of a private bank in Karachi said, “but one should keep in mind that average annual inflation in year 2010 was very high, which has hit the salaried class hard.”

“The average annual inflation in fiscal year 2008, 2009 and 2010 remained over 15 per cent. This high inflation has eroded the purchasing power of a common man by at least 20 per cent,” he added.

Average inflation in Pakistan in current fiscal year 2009-10 is expected to remain around 12 per cent, which was over 21 per cent last year –highest in last 37 years.

The inflation in recent years is the worst that the country has seen in its history, said the advisor to the Prime Minister on economic affairs, Abdul Hafeez Shaikh, in his budget speech on Saturday.

He also mentioned that the main focus of government should be to reduce inflation if it has to ease the problems of common Pakistani. Erum Anwar, a private school teacher said that government should focus on reducing inflation in the country and that increasing minimum annual taxable income would trivially help salaried class.

She said inflation is a much more gruesome problem for a common man than the increase of Rs100,000 in minimum annual taxable income. “The unprecedented rise in inflation has badly hit even the middle income groups. Government inflation figures hovers around 10 to 15 per cent, but what we see in markets is more than double of what the government says about inflation,” she added.

“Government has taken the mandatory step by increasing annual taxable income to Rs300,000,” a government employee of grade 15 fifteen said. “A lot has to be done to control the damage that inflation has inflicted upon the common man in the last three four years.”

“However, I certainly appreciate the government’s move. At least the government has responded to the wishes of the salaried class, which was awaiting some raise in the minimum annual taxable income,” she added.

Published in the Express Tribune, June 6^th, 2010.