Budget 23-2022: Taxes hidden in the new federal budget that could add to the financial woes of the middle class
The most neglected and most burdensome section of this budget is the middle class of the country. The increase in taxes and higher tariffs on oil and gas are bound to increase inflation and the middle class has to bear the brunt.
Mohammad Asim, who works for a private information technology company, seems to be complaining about the lack of relief for the middle class in next year's budget for Pakistan.
He said that in the budget, some relief money has been announced for the poor in the form of social security net. Along with this, the salaries of government employees have also been increased by 15% which will provide them some relief in the face of rising inflation in the country.
But there are about 1.1 million government employees in the country, while a large number of white-collar employees work in private sector companies that have not yet been able to raise their salaries despite rising inflation. '
He said the government's decision to raise taxes would have an impact on the middle class as they would bear the brunt of inflation due to these taxes.
Experts in Pakistan's economic and social affairs seem to confirm his concerns.
According to economists, the budget includes some taxes and levies that were not mentioned in the budget speech but are included in the finance bill and will further increase inflation in the country and its biggest target is the medium. There will be a class.
Is there any relief provided in the budget for the middle class?
In the federal budget, the government has announced an increase in the salaries of government employees and with it a five percent increase in the pensions of retired government employees.
Economist Shahrooz Khan Lodhi said, “One relief in this budget for the salaried class is the change in the tax slab and tax exemption on annual income of Rs. 600,000 to Rs. Easy to pay.
Which means it's about to be the most delusional time of the year, as well. Similarly, the slabs that have been changed will benefit salaried employees with some reduction in tax rates.
Dr. Alia Hashmi, an expert on economics and sociology, said: "The budget does not provide any special relief to the middle class except that the salaries of government employees have been increased and with it the payroll. The class has also been exempted from tax slabs and tax limits.
"Apart from this relief, no special relief has been provided for the middle class in this budget and it seems that the difficulties for the middle class are likely to increase in the coming months due to the government's budget measures," he said.
Which new taxes in the budget will increase the rate of inflation?
The biggest increase in the new taxes imposed in various sectors in the budget presented by the government is the target of raising Rs 750 billion in the next financial year in the form of petroleum levy on oil products.
It may be recalled that in the current financial year, only Rs 135 billion was collected through this levy and then the previous government and the present government had reduced it to zero so that the prices of oil products in the country could not go up much.
Zahid Mir, an oil expert, told the BBC: "The government's goal of raising taxes on petroleum levies in the next financial year means that at the beginning of the next financial year, it will need one liter of petrol and Thirty rupees will have to be collected from consumers on diesel.
The revised target for the current financial year is to collect Rs 25 billion in gas development surcharge and the government has set a target of Rs 200 billion for the next financial year which will be collected in gas bills. Similarly, the government has increased the current levy target on LPG from Rs 5 billion to Rs 8 billion which will be collected from consumers.
The government has set a revenue target of Rs 7,000 billion this year, of which Rs 4,500 billion will be collected in the form of direct taxes, including sales tax, excise duty and customs duty, which will be levied on consumers. And is levied on imports into the country.
Shahrooz Khan Lodhi said, “These taxes mean that consumers will have to pay more and the middle class will be the biggest victim as sales tax is levied on the sale of goods and consumers There is an additional cost.
According to him, in the next financial year, the middle class will have to pay higher rates for electricity, gas and petrol as sales tax and levy will increase the inflation rate in addition to the amount of these bills.
He said that if the government had reformed the direct tax system and met the target of raising more taxes, it would have reduced the tax collected directly and reduced it to the middle class. It would have an effect. '
How will the middle class be affected?
Regarding the government's imposition of higher taxes in the form of petroleum levy, surcharge on gas and these direct taxes and its impact on the middle class, Shahrooz Lodhi said, “We have set a target of 11% inflation next year That is unrealistic because food inflation has reached 20%.
Dr. Alia Hashmi said, "The situation at present is that if only the salaries of government employees have been increased in the country, then the change in the tax slab will be of some benefit to the salaried class."
It should be noted that 70% of the working class in the country work in the informal economy and it is up to their employer to decide whether to increase their salaries or not. In this era of inflation, it is quite possible that their employers did not increase their salaries.
He said that due to additional taxes, there is a risk of sharp rise in inflation in the country which will reduce the purchasing power of this segment. And with this declining purchasing power, they will have to compromise on certain needs. "
Dr. Alia said that it seems that due to declining purchasing power, this segment will now spend less on food or spend on food which can only fill the stomach but it does not have much medical benefits.
"Children, for example, need protein and calcium, and it seems that middle-class parents will now spend less on it, which in a way will make their health worse."
"It will be possible for this class to come from car to motorcycle as it will be difficult for this class to drive now due to high cost of fuel," he said.
Dr. Alia said that "this class can also compromise on the education of children. Due to this rising inflation, it seems that this class will have to cut down on a lot of necessities to save costs."
According to him, there is some relief for the poor in this budget and the needs of this class are also limited. Similarly, the rich class will not be affected much but the most negative impact of this budget will be on the middle class. Will
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