Prime Minister Shehbaz Sharif on Wednesday acknowledged the need to reduce direct taxes to boost investment, stressing that sustainable economic growth cannot be achieved by increasing the tax burden.
“How long can we keep stretching this?” he questioned during an address to the inaugural session of the Pakistan Governance Forum 2026 in Islamabad. “Unless there is growth and unless production and exports increase, and unless you invest and attract foreign direct investment, how much more tax can you continue to impose?” he continued, maintaining the federal government would aim to reduce taxes in the upcoming budget, due in June. The ultimate objective, he said, was to facilitate the business community and provide confidence to investors.
During his speech, Sharif reiterated the need to expand the tax net, saying various initiatives had enabled the country’s tax-to-GDP ratio to reach 10.5%. He further noted the need to reduce indirect taxes as well, regretting that these were taken from consumers and end-users but not being deposited with the government.
The prime minister emphasized the need for a “whole-of-government” approach to tackle economic challenges, saying economic growth required collective endeavors.
Sharif reiterated that the country was on the verge of default in June 2023, but the government had managed to stabilize the economy through collective efforts of the federal and provincial governments and the military hierarchy. He recalled that inflation had been brought down from nearly 38% to under 7% and the policy rate had been reduced to 10.5%. However, he stressed, the country must expand exports to continue its growth momentum.
Defending controversial economic measures, the prime minister said some were homegrown without the involvement of the International Monetary Fund (IMF), adding this was necessary to break free of the boom-bust cycle. He claimed the government had reduced the per unit cost of electricity and had “protected” solar investment. However, he added, the country was still enduring Rs. 200 billion in power theft and only the whole-of-the-government approach could tackle this issue.
Sharif further defended his decision to shutter the Utility Stores Corporation, maintaining it was “a den of corruption and theft.” The closure of the Pakistan Works Department had similarly helped save billions, he added.
He reiterated that it was not the government’s job to do businesses, but rather it served to facilitate the private sector, exporters and investors, and support their efforts in productivity and growth. The government is achieving this through various incentives, he added.