World Bank retracts tax statement.

ISLAMABAD -- The World Bank on Saturday retracted its recommendation regarding taxing monthly salaries below Rs50,000, as fresh data reveals that the highly marginalised salaried class again paid more taxes than the combined taxes paid by the richest exporters and the real-estate sector in the past three months.

Salaried individuals paid Rs70.6 billion in income tax during the July-September period of the current fiscal year, a sum larger than the combined contribution by the richest exporters and the influential and unregulated real estate sector, according to government statistics.

There is no match between the wealth and income of exporters and real-estate sector players in comparison to the marginalised salaried persons. The combined taxes paid by exporters and real-estate players were just Rs65 billion in three months, nearly Rs6 billion less than what was paid by salaried persons, many of whom come to the office on public transport or motorcycles.

WB retracts recommendation

The World Bank on Saturday clarified its position on the highly controversial recommendation of imposing taxes on incomes below Rs50,000 per month. The Washington-based lender stated that its recommendation was based on 2019 data, which needs to be updated in light of recent inflation and labour market conditions.

'The World Bank certainly does not recommend any reduction in the current nominal threshold, and how it was framed above may have indeed been misleading,' said a spokeswoman of the WB.

'Previous analysis included in the Public Expenditure Review using 2019 data suggested that a reformed income tax structure could include a lower exemption threshold for salaried individuals, but this analysis would need to be updated to take account of recent inflation and labour market changes to make sure low incomes are not affected,' according to the WB.

While accepting its mistake, the WB added that 'the recommendation in the Pakistan Development Update should have been clearer on the need for new analysis needed on more recent data to inform this reform.'

The Express Tribune had reported this week that the WB recommended lowering the current income tax exemption threshold of Rs50,000 per month income.

The lender stated that the World Bank does not recommend any particular new level for income tax exemption and instead suggested conducting a fresh survey to gauge the level.

'Appropriate changes to tax thresholds should be assessed based on new survey data and designed...