SCAP seeks tax relief for salaried class in budget 2025-26

May 29, 2025 (MLN): The Salaried Class Alliance of Pakistan (SCAP) has called on the government to provide immediate relief to the salaried segment in the upcoming Finance Budget 2025-2026, citing disproportionately high tax burdens, rising inflation, and worsening economic conditions.

According to the Alliance, salaried individuals—comprising government and private employees, including professionals in media, banking, education, and corporate sectors—are the only segment paying their due share of income tax.

They do so without any adjustment in Pakistan, as per the press release issued today.

Despite this, they have borne the brunt of recent fiscal policies, including increased slab rates and a 10% surcharge on higher incomes, introduced in the last budget.

“The middle class has been crushed. While inflation has doubled in the past three years, the minimum taxable income threshold remains stuck at Rs50,000 per month,” the SCAP stated.

The Alliance warned that continued neglect of this segment is contributing to the country’s worsening brain drain.

The emigration of skilled and educated professionals reportedly surged by 119% over the past year, with heavy taxation cited as a key factor.

The Salaried Class Alliance Pakistan (SCAP) has raised serious concerns over structural inequalities in the country’s tax regime, pointing out the disproportionate burden borne by salaried individuals compared to other sectors.

According to SCAP, in the fiscal year 2025, salaried individuals are projected to contribute over Rs550bn in taxes.

In contrast, exporters and retailers collectively contribute only Rs100bn.

The agriculture sector, despite accounting for nearly 20% of the GDP, contributes less than 1% in tax revenue.

The Alliance also highlighted that some landlords and privileged groups benefit from extensive tax exemptions, while wage earners face tax rates as high as 35%, along with an additional 10% surcharge.

SCAP expressed alarm over the growing trend of informality in the economy, where businesses increasingly pay salaries in cash to evade high tax deductions.

This practice, the Alliance warned, undermines documentation efforts and hampers the country’s long-term development.

In response, SCAP has issued a series of demands aimed at addressing the imbalance.

These include raising the minimum taxable income threshold to Rs100,000 per month, restoring tax rates to FY2022 levels, and reducing government expenditure to provide relief to those facing higher tax rates.

The Alliance has also called for the abolition of the 10% surcharge, labeling it a penalty on timely and compliant taxpayers.

Furthermore, SCAP urged the government to reinstate tax credits for the salaried class and widen the tax net to include untaxed sectors such as agriculture and informal businesses.

The Alliance emphasized that fair taxation is essential not only for economic justice but also for preventing further erosion of the country's skilled workforce and promoting sustainable economic development.

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