Former finance minister Dr. Hafiz A. Pasha stated that salaried employees in Pakistan's higher income brackets face tax rates 25 percent higher than their counterparts in India and Bangladesh.
He proposed raising the annual taxable income threshold from Rs0.6 million to Rs1.2 million and capping the maximum rate at 30 percent. He presented these proposals at the 29th Sustainable Development Conference, organised by the Sustainable Development Policy Institute (SDPI) in collaboration with the Foreign, Commonwealth and Development Office (FCDO) on Friday.
Calling for comprehensive and progressive tax reforms, Pasha noted that salaried employees and large-scale manufacturers are disproportionately taxed, while property, retail, wholesale trade, and agriculture remain undertaxed. He estimated that a more equitable tax base could generate an additional 3-3.5 percent of GDP for development spending and reduce government borrowing.
These issues were discussed in a high-level dialogue titled 'Reforms for Growth in Pakistan: From Priorities to Delivery,' which also highlighted the need for stronger local governments and governance reforms. Punjab Assembly Speaker Malik Muhammad Ahmad Khan stated that meaningful reform requires adherence to the Constitution, the rule of law, and the authority of elected representatives.
He noted that unpredictable governance, political victimisation, and excessive regulation discourage investment, while education and public services remain neglected. Chairman of the National Assembly Standing Committee on Finance and Revenue Syed Naveed Qamar called for fiscal discipline backed by political consensus, noting that expenditure pressures and a narrow tax base cannot be addressed in isolation.
He questioned why the Council of Common Interests (CCI) is not being used effectively to resolve federal-provincial matters. Chairman of the National Assembly Standing Committee on Privatisation Dr. Farooq Sattar argued that the 18th Amendment and the National Finance Commission (NFC) award strengthened provinces without transferring powers to districts.
He called for fiscally empowered local governments and greater local participation in economic planning. Former finance minister and Awaam Pakistan Secretary-General Dr. Miftah Ismail stressed that better education, healthcare, and provincial spending are essential for growth.
He proposed reviewing electricity's fixed and variable cost structures. Former federal minister Engr.
Khurram Dastagir Khan stated that manufacturers in industrial centres like Gujranwala are deterred from expanding by burdensome tax administration and high energy costs. Former finance minister Asad Umar concluded that sustainable growth requires lower deficits and an export-oriented economy.