The government is weighing several options to enhance salaries for government employees by 10% to 15% in the upcoming budget for 2024-25. This move is part of efforts to boost both Federal Board of Revenue (FBR) tax revenues and non-tax revenues to secure a $6 billion agreement with the International Monetary Fund (IMF) under the Extended Fund Facility (EFF).
In the proposed budget, the government is eyeing a target of over Rs12.5 trillion for FBR tax revenues. While the Ministry of Finance favors a 10% salary increase, there’s potential pressure to raise it by 2.5% to 5%, resulting in a potential hike of 12.5% to 15%.
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Another proposal under review is to raise the car monetization allowance for higher-grade officers (grades 20, 21, and 22) by 20% to 25%. Currently, grade 20 officers receive Rs67,000 monthly, grade 21 officers Rs77,000, and grade 22 officers Rs87,000.
Adjustments are prompted by inflation, with no increase in these allowances since their introduction in 2012. Pension reforms are also slated for the 2024-25 budget. One idea is to tax pensioners earning over Rs100,000 monthly, possibly introducing various tax brackets for higher earners.
The proposals outline that federal employees would receive a gross pension based on 70% of their average pensionable earnings over the last 36 months before retirement. Early retirement after 25 years of service is an option, with a 3% annual reduction in gross pension until reaching the standard retirement age.
