KARACHI – The Salaried Class Alliance of Pakistan (SCAP) has strongly rejected the government’s claims of providing meaningful tax relief to salaried individuals in the recently unveiled federal budget for FY2025–26. In a charged press conference at the Karachi Press Club, SCAP leaders described the so-called relief measures as cosmetic and misleading, accusing the government of using “number juggling” to mask the continued economic burden on Pakistan’s working class.
Government Cuts Tax — But Relief Called Insignificant
Finance Minister Muhammad Aurangzeb recently announced a reduction in income tax rates for low and middle-income earners as part of broader fiscal reforms. While the rate for annual incomes between Rs600,001 and Rs1.2 million has been reduced from 5% to 2.5%, and for Rs1.2 million to Rs2.2 million it has dropped from 15% to 11%, SCAP argues that the actual financial benefit is negligible.
“This is number juggling — not relief,” said SCAP member Bilal Farooq Rizvi.
“A Rs10 billion reduction spread across the entire working population is practically meaningless.”
SCAP provided data from the Federal Board of Revenue (FBR), showing income tax collections from salaried individuals stood at Rs550 billion in FY25, already Rs112 billion above the FBR’s own target. In FY26, the target is set at Rs540 billion — just a Rs10 billion difference, further fueling SCAP’s argument that no real effort has been made to ease the burden on formal-sector employees.
Tax Cuts Explained — But Impact Called Minimal
Here’s a breakdown of the proposed tax changes for FY26:
| Income Bracket (Annual) | Old Tax Rate | New Tax Rate | Fixed Tax Cut |
|---|---|---|---|
| Rs600,001 – Rs1.2 million | 5% | 2.5% | – |
| Rs1.2 million – Rs2.2 million | 15% | 11% | Rs30,000 → Rs6,000 |
| Rs2.2 million – Rs3.2 million | 25% | 23% | Rs180,000 → Rs116,000 |
| Rs3.2 million – Rs4.1 million | 30% | 30% | Rs430,000 → Rs346,000 |
| Above Rs4.1 million | 35% | 35% | Rs700,000 → Rs616,000 |
A 1% reduction in the super tax for those earning over Rs10 million was also included, dropping from 10% to 9%. But SCAP representatives argue that these small tweaks fail to offer any substantial relief, especially considering how much salaried professionals already contribute to the national tax pool.
“The salaried class paid five times more in taxes than exporters and retailers in FY25,” claimed Rizwan Hussain, another SCAP member.
“This discrimination must end.”
Demand for Real Reform: 2.5% Cut Across All Slabs
SCAP leaders urged the government to implement a minimum 2.5% tax cut across all income slabs — not just for the lowest earners — and to completely eliminate the super tax. They also called for relief on taxes applied to mutual funds and similar investment vehicles, arguing that encouraging formal investments is key to economic growth.
Adeel Khan, another SCAP representative, criticized the disproportionate increase in tax burden over the past few years. He pointed out that income tax collection from salaried individuals has grown seven to eight times over just three to four years, from Rs70-80 billion to over Rs550 billion — a shocking increase not matched by relief or services.
“We’ve received a maximum relief of Rs7,000 per month — that’s not even enough to cover electricity bills. This is not relief; it’s a joke,” he said.
Legal Action on the Horizon
The alliance also hinted at legal action if the proposed rates are passed without revision. Rizwan Hussain confirmed that SCAP is preparing to file a case to demand fairer tax treatment if Parliament approves the Finance Bill 2025 as it currently stands.
“We will not stay silent. If Parliament doesn’t fix this injustice, the courts will have to,” he said.
