Chairman Economic Policy and Business Development, economic think tank and former minister Dr Gohar Ejaz termed the tax relief announced for salaried individuals in the federal budget 2026-27 as inadequate, arguing that the government missed an opportunity to provide meaningful support to Pakistan’s struggling middle class and stimulate economic growth.
Reacting to the budget proposals unveiled by the government, Ejaz said the reduction in tax burden for salaried taxpayers falls short of expectations at a time when inflation, rising utility costs, education expenses and healthcare charges continue to squeeze household incomes.
“The proposed tax relief for the salaried class in the 2026-27 budget is not enough,” he said, urging the government to further revise the tax measures during the budget approval process.
According to Ejaz, the salaried class remains the most documented and tax-compliant segment of the economy, yet continues to shoulder a disproportionately high tax burden. He maintained that excessive taxation on middle-income households has significantly weakened their purchasing power and ability to meet essential family expenses.
“The salaried class is the most important segment of the economy. Let the middle class become the engine of growth for Pakistan,” he said, adding that stronger consumer spending would revive economic activity, boost business confidence and ultimately generate additional revenues for the government through indirect taxes.
Calling for a major restructuring of the income tax regime for salaried individuals, Gohar proposed a simplified three-tier tax structure.
Under his proposal, individuals earning between Rs100,000 and Rs500,000 per month should pay a flat tax rate of 5 percent. Monthly incomes ranging from Rs500,000 to Rs1.5 million should be taxed at 10 percent, while incomes above Rs1.5 million per month should face a 20 percent tax rate.
He argued that such a framework would significantly increase disposable incomes, encourage spending and support broader economic expansion without undermining revenue generation.
