Industrial workers demand allowances in budget

Industrial workers have demanded of the government to give allowances to them according to personal tax liability. Workers of several industries submitted proposals to Federation of Pakistan Chambers of Commerce and Industry for inclusion in trade body's budget proposals 2007-08.
The proposals stated that under the Repealed Ordinance 1979, workers enjoyed allowances to be offset against their personal tax liability. Therefore, "it is suggested that burden of salaried class should be mitigated by offering them allowances in terms of child education allowance, family allowance etc, to be offset against their salary income."
"This is necessary to rationalise and harmonise the tax structure of Pakistan with those countries where higher tax rates are well complimented by such relief," the proposals indicated. The salaried class should also be given adjustment against their tax liability in respect of allowable investment the limit of which should be enhanced.
In the previous budget, the concept of progressive taxation had been done away with and it is now based on flat rate taxation. This resulted in a negative impact when a person crosses one slab and enters the next slab as the increase in income of one rupee results in a much higher rate of tax amount.
It is suggested that the concept of marginal relief should be introduced in order to cater to the negative impact cast by the flat rate taxation and the amount of tax levied in such cases should not be more than 50 percent of increase in income. This would reduce the negative impact on lower as well as higher income class and will result in more equitable taxation.
The Finance Bill proposes to simplify the taxation pertaining to salary and there has been a major departure from the known method of taxation, which is based on the progression of income and seeks to withdraw all the exemptions with the exception of few available under the rules. The gross amount of taxable salary will now be charged to tax at the tax rate applicable on the bracket in which gross amount falls, meaning thereby the entire salary will be charged to tax at one rate.
"The amendment seems to be cosmetic and it is evident that the main prey is the lower and middle income class to whom no benefit has been given, rather they are under increased tax burden. The benefit is just an eye-wash when compared with the ones given to rich class."