# *Detailed SUMMARY of the article "Scant relief, mounting burdens" by Umair Javed, Published in Dawn on June 16th, 2025:* The article analyzes *Pakistan's proposed budget* and its limited relief for the *salaried class*, highlighting that the *finance minister* described it as merely a *'direction of travel'* rather than substantial relief. For *salaried earners* making less than *Rs225,000 per month*, the tax burden is lower than the last three years, while those earning *Rs225,000-275,000* get relief back to *2022-23 rates*. However, earners above *Rs275,000* still face higher taxes than all previous years except *2024-25*, with maximum relief capped at *Rs84,000 annually* or *Rs7,000 monthly*. The article presents two main frustrations: first, the relief fails to compensate for *purchasing power erosion* due to *rampant inflation* over three years. A person earning *Rs125,000 monthly* in *2022* paid *Rs60,000* in income tax, and while this year's budget reduces it by *Rs24,000* to *Rs36,000*, inflation has reduced the real value of their salary to only *Rs55,000* in *2022 terms*. With *Pakistan's economy* contracting two years ago and growing at only *2.7%*, private salaries cannot keep pace with inflation. The second frustration stems from *tax system inequity*, where *salaried workers* are treated as a *captive revenue source*. In the first eight months of the current fiscal year, they paid nearly *Rs350 billion* in income taxes, *56% higher* than the previous year, significantly more than other earner categories. While salaried workers face *at-source deduction* without choice, business owners use *creative tax evasion* methods including *cash-only transactions*, *benami accounts*, *fake receipts*, and *dual ledgers*. The *Tajir Dost Scheme* yielded only a few million rupees against a *Rs50 billion target*. The budget also removes *tax exemptions* on *50% withdrawals* from *voluntary pension funds*, primarily affecting *private sector employees* without *state-guaranteed pensions*. Additionally, it eliminates the *25% tax reduction* for *teachers and researchers* in *public and non-profit higher education institutes* after *June 2025*, despite providing *retroactive coverage* for the past three years due to *faculty mobilization*. This burdens the *university sector* already struggling with *Rs60 billion* federal allocation stagnation, delayed faculty payments, and inadequate increments. The article warns that *crippling financial conditions* can override *pro-social* and *intellectual motivations* for teaching. The *National Assembly's Standing Committee on Finance* received assurance from the *Revenue Division secretary* that the tax reduction would be restored without a *sunset clause*, but the *Finance Bill* needs revision to reflect this commitment. # *Easy/Short SUMMARY*: *Pakistan's proposed budget* offers limited relief to the *salaried class*, with maximum savings of *Rs7,000 monthly*. Despite tax cuts, *inflation erosion* means real wages remain low, while *salaried workers* paid *Rs350 billion* (*56% increase*) compared to tax-evading businesses. The budget removes *pension fund exemptions* and *teacher tax reductions* after *June 2025*, further burdening *higher education*. The *finance minister* calls it a *'direction of travel'*, but substantial relief remains absent. # *SOLUTIONS of The Problem*: ## *1. Expand Tax Relief* Increase the *tax relief cap* beyond *Rs84,000 annually* to better compensate for *inflation erosion*. ## *2. Combat Business Tax Evasion* Implement *digital payment systems* and *strict penalties* to eliminate *cash transactions* and *fake receipts*. ## *3. Restore Teacher Tax Benefits* Remove the *sunset clause* and permanently maintain *25% tax reduction* for *educators and researchers*. ## *4. Protect Pension Funds* Reinstate *tax exemptions* on *50% withdrawals* from *voluntary pension funds* for *private sector workers*. ## *5. Strengthen Tajir Dost Scheme* Revamp the scheme with *incentives* and *enforcement mechanisms* to achieve *Rs50 billion target*. ## *6. Increase Higher Education Funding* Raise federal allocation beyond *Rs60 billion* to support *university operations* and *faculty salaries*. ## *7. Link Wages to Inflation* Mandate *inflation-indexed salary adjustments* for both *public* and *private sector workers*. ## *8. Improve Tax System Equity* Create *uniform tax collection* mechanisms across all *income categories* to ensure fairness. ## *9. Boost Economic Growth* Implement policies to accelerate growth beyond *2.7%* to enable *real wage increases*. ## *10. Establish Tax Justice Commission* Form an independent body to monitor *tax equity* and address *salaried class grievances*. # *IMPORTANT Facts and Figures Given in the article*: - *Tax relief* capped at *Rs84,000 annually* or *Rs7,000 monthly*. - *Salaried workers* earning less than *Rs225,000 monthly* get better relief than last three years. - *Pakistan's economy* grew at only *2.7%* after contracting two years ago. - Person earning *Rs125,000 monthly* in *2022* paid *Rs60,000* in income tax. - Real value of *Rs125,000 salary* today equals *Rs55,000* in *2022 terms*. - *Salaried workers* paid *Rs350 billion* in first eight months, *56% higher* than previous year. - *Tajir Dost Scheme* yielded few million rupees against *Rs50 billion target*. - Federal allocation for *higher education* stagnant around *Rs60 billion*. - *25% tax reduction* for teachers ends after *June 2025*. # *IMPORTANT Facts and Figures out of the article*: - *Pakistan's inflation rate* averaged *29.2%* in *2023* (*Pakistan Bureau of Statistics*). - *Salaried class* constitutes *70%* of total *income tax revenue* (*FBR*, 2024). - *Tax-to-GDP ratio* in Pakistan is *8.6%*, among lowest globally (*World Bank*, 2024). - *Higher education* receives only *0.3%* of GDP compared to *2.5%* global average (*UNESCO*, 2024). - *Private sector* contributes *80%* of *Pakistan's GDP* (*Economic Survey*, 2024). - *Voluntary pension funds* cover less than *5%* of workforce (*SECP*, 2024). # *MCQs from the Article*: ### 1. *What is the maximum annual tax relief offered to salaried workers?* A. Rs60,000 *B. Rs84,000* C. Rs125,000 D. Rs225,000 ### 2. *By what percentage did salaried workers' tax payments increase in the first eight months?* A. 25% B. 45% *C. 56%* D. 70% ### 3. *What was Pakistan's economic growth rate mentioned in the article?* A. 1.5% *B. 2.7%* C. 3.2% D. 4.1% ### 4. *What is the federal allocation for higher education mentioned?* A. Rs50 billion *B. Rs60 billion* C. Rs70 billion D. Rs80 billion ### 5. *When does the 25% tax reduction for teachers end?* A. June 2024 *B. June 2025* C. June 2026 D. December 2025 # *VOCABULARY*: 1. *Caveat* (تحفظ) – A warning or cautionary statement 2. *Tangible* (قابل لمس) – Clear and definite; real 3. *Erosion* (کٹاؤ) – Gradual destruction or diminution 4. *Rampant* (بے قابو) – Flourishing or spreading unchecked 5. *Stagnant* (جامد) – Showing no activity; sluggish 6. *Captive* (قیدی) – Confined or trapped 7. *Deduction* (کٹوتی) – Amount subtracted or withheld 8. *Benami* (بے نامی) – In someone else's name 9. *Comically* (مضحکہ خیز) – In an amusing or ridiculous manner 10. *Tangible* (ٹھوس) – Perceptible by touch; real 11. *Retroactive* (تاثیر کے ساتھ) – Taking effect from a past date 12. *Mobilisation* (متحرک کرنا) – Organization for a purpose 13. *Sleight* (چالاکی) – Skill in achieving something 14. *Stagnant* (بے حرکت) – Not flowing or moving 15. *Marginal* (معمولی) – Small in amount or significance 16. *Viable* (قابل عمل) – Feasible or workable 17. *Pecuniary* (مالی) – Relating to money 18. *Crippling* (کمزور کرنے والا) – Causing severe damage 19. *Pro-social* (سماج نواز) – Beneficial to society 20. *Imperative* (لازمی) – Of vital importance; crucial 📢 *Attention Please!* We appreciate your commitment to acquiring knowledge through our summaries. 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Click the link below to join now 🔗 [Dawn Article Summaries](https://cssmcqs.com/dawn-editorials-articles-summary-for-students-pdf-download/) *WhatsApp Channel Link*: [https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y](https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y) --- *www.dawn.com* *Scant relief, mounting burdens* *Umair Javed* *6 - 8 minutes* AFTER being questioned on pre-budget claims, the finance minister clarified in a press conference that the proposed budget principally provides a 'direction of travel' for relief. This caveat is useful to bear in mind because the actual scale of relief for overtaxed segments, such as the salaried class, remains limited. The relief offered is slightly more tangible at lower tiers of salaried earners. For those making less than Rs225,000 per month, the proposed tax burden is less than that levied in each of the last three years. Between 225,000 to 275,000 per month, the relief takes the burden back to 2022-23 rates. For those making above Rs275,000, even the reduced amount proposed this year is greater than what earners paid in all previous years barring the last one (2024-25). A let-off capped at Rs84,000 per year, or Rs7000 per month, is what many will receive. There are two distinct reasons why reactions to the government's proposals range from frustration to resigned indifference. The first is that the let-off, even for those at the lower end of the salary range, does nothing to compensate for the erosion of purchasing power on account of rampant inflation in the last three years. As documented by tax equity activist Amer Sharif, a person making Rs125,000 per month or Rs1.5 million annually, in 2022 paid Rs60,000 in income tax in that year. This year's proposed budget reduces their annual tax burden by Rs24,000 to Rs36,000. Sim­ultaneously, however, inflationary havoc means that the real value of the same salary today, in 2022 terms, is only around Rs55,000 per month. One can argue that the job of tax relief is not to compensate for real wage erosion. That is a task better served by wage increments. But in a stagnant economy, which contracted just two years ago and has since grown at 2.7 per cent, the prospect of privately earned salaries keeping up with inflation is non-existent. Salaried earners are treated as a captive source of additional revenue by the government. With the market not delivering, people are left with no option but to look to the government for relief, and the latter's actions have been found wanting. The speed of downward mobility — of giving up occasional leisure, of making difficult choices in terms of where to send children to school, of cutting back even on essentials — afflicting nearly every wage-earning household may have lessened a bit due to a fall in inflation, but the 'direction of travel' is still the same. If the first reason for frustration comes from feeling squeezed without tangible relief, the second comes from deep-seated injustice within the tax system. Salaried earners are treated as a captive source of additional revenue by the government. In the first eight months of the current fiscal year, salaried workers paid nearly Rs350 billion in income taxes, 56pc higher than what was paid in the same period last year. Of greater concern is that this amount is considerably higher than what's paid by other categories of earners. The system of at-source deduction by employers means a salaried worker doesn't get a choice in taxation matters on their gross earning. On the other hand, a business owner (such as a retailer or wholesaler) can earn the same amount in gross but rely on a hundred 'creative' ways to evade taxes. Cash-only transactions, multiple/benami accounts, fake receipts, dual ledgers are all deployed to maximum effect. Scheme after scheme to reduce this inequity has failed, with the latest — the Tajir Dost Scheme — yielding a comically low few million rupees against a target of Rs50bn. This year's budget proposals appear to have shrugged off the issue altogether, making no tangible attempt to address this glaring inequity. Adding to the overall frustration are two other budget proposals detrimental to salaried workers. The first of these is the removal of tax exemptions on withdrawals of up to 50pc of the balance from voluntary pensions funds. Such funds are most likely to be used by private sector salaried employees, who face uncertain retirement conditions without the luxury of state-guaranteed pensions. The one instrument that provided an alternative is now less viable as an investment product. The other is the removal of the 25pc tax reduction offered to teachers and researchers in public and non-profit higher education institutes. Throu­­gh a proposed clause, the Finance Bill provides retroactive coverage to this tax reduction for the past three years; a concession made possible only by the mobilisation efforts of faculty associations and university leaderships across the country. But by sleight of hand, an additional sub-clause limits the relief till end June 2025, meaning the reduction does not apply from July onwards. This step further burdens a university sector already reeling under considerable financial pressure. Current expense allocations by the federal government for higher education are mostly stagnant around the Rs60bn mark. Many public and private sector universities struggle to pay faculty on time, let alone provide them with decent increments to keep up with inflation. There is an indirect impact of these constraints on students via tuition fees, which go up to make for resource shortfalls. The tax reduction offered a marginal benefit that helps make an essential occupation viable for its workers. No country can prosper without a functional higher education system. No higher education system can work without attracting and retaining good faculty. Granted, academic fulfilment often outweighs pecuniary benefits in attracting teachers and researchers. But crippling financial conditions can override even the most deeply held pro-social or intellectual motivations. In the National Assembly's Standing Commit­tee on Finance, the secretary Revenue Division (ie, chairperson FBR) assured parliamentarians that the tax reduction will be restored without a sunset clause. It is imperative that the Finance Bill is revised to reflect this assurance. Otherwise the government should ask itself if it deems the occupational viability of teaching and research in Pakistan to be less worthy than the few more rupees it collects as tax revenue. The writer teaches politics and sociology at Lums. X: @umairjav Published in Dawn, June 16th, 2025