The government plans to reduce the tax burden on salaried individuals in the upcoming federal budget, Minister of State for Finance and Revenue Bilal Azhar Kayani claimed on Friday, acknowledging that limited fiscal space under the International Monetary Fund (IMF) program constrains the extent of relief measures.
Addressing a pre-budget seminar organized by the Rawalpindi Chamber of Commerce and Industry, Kayani said the FY27 federal budget is expected to be presented in the first week of June. “The government intends to provide relief to taxpayers and the salaried class,” he claimed, while stressing authorities are working within commitments made under the IMF stabilization program.
“There is no doubt that further investment can come by improving our current business model,” he said, maintaining the government was trying to provide maximum possible relief despite limited fiscal space.
According to Kayani, Prime Minister Shehbaz Sharif is conducting weekly meetings on reforms for the Federal Board of Revenue (FBR). He said the introduction of a faceless customs system aimed at improving transparency.
The state minister said authorities had collected Rs. 803 billion through tax enforcement measures in the previous fiscal year and was reviewing manufacturing capacity on a sector-by-sector basis. “We do not want the business community spending most of its time dealing with the FBR,” he said, while noting businesses remained central to tax collection, employment generation and exports.
Focus on tax relief
Kayani said the government would maintain “zero tolerance” for harassment by tax authorities and continue reforms aimed at improving the tax administration system and enhancing ease of doing business. He maintained Pakistan had achieved macroeconomic stability over the past two years through fiscal discipline, citing improved foreign exchange reserves and renewed confidence from international financial institutions.
Despite geopolitical tensions, he said, the Pakistani rupee remained stable and the country avoided the fuel shortages experienced by some economies in the region.
Among the government’s key priorities, he said, was boosting exports and strengthening domestic economic capacity to gradually reduce reliance on IMF assistance. He said the government was also pursuing reforms to support small and medium-sized enterprises (SMEs), including extending the utilization period for imported goods for small exporters to 18 months.
Kayani said the privatization process was moving forward rapidly, noting the sale of Pakistan International Airlines had recently been completed, while work on the privatization of three power distribution companies was underway. He also highlighted government-backed housing finance initiatives approved by the prime minister to stimulate construction activity.
Broader cuts
During the gathering, business leaders urged the government to abolish the super tax, reduce corporate and sales tax rates, and raise the income tax exemption threshold for salaried individuals. Participants also called for measures to lower the cost of doing business and the introduction of a long-term industrial policy to support sustainable economic growth.
In a separate statement, the Ministry of Finance said a delegation of the Central Organization of Traders Pakistan, led by its president Kashif Chaudhry, had met Kayani in Islamabad to present budget proposals related to the retail and wholesale sectors. It said the delegation proposed regulatory reforms aimed at removing bottlenecks in the tax system, simplifying administrative procedures and encouraging voluntary compliance with tax laws.
The traders also demanded the introduction of an “easy tax scheme” in the upcoming budget to simplify taxation for the business community.
Kayani assured the delegation that Prime Minister Sharif would consider the proposal for a simplified tax scheme and reiterated the government’s commitment to creating a business-friendly environment. He said the government would review all proposals submitted by traders to ensure a balance between revenue generation and commercial growth while promoting strategic cooperation with the private sector.