FinMin says govt focused on broadening tax base, not burdening salaried class in budget

ISLAMABAD:

Finance Minister Muhammad Aurangzeb on Saturday said that Pakistan’s macroeconomic indicators remained stable and the government was focused on expanding the tax base rather than increasing the burden on salaried individuals.

The finance minister said, “in this budget, we have taken additional and strong steps in this regard, and keeping in mind the principles of equity and fairness, we have reduced the burden of tax on the existing taxpayers, especially the salaried class, small businesses, industries, exporters and construction industries, whereas the provision of property loans has been made sure for the export sector and agriculture".

“To expand the tax net, retailers have been made part of the system through an easy scheme, and comprehensive steps have been taken to further improve compliance and enforcement,” he added.

While addressing a budget session in the National Assembly, he said that the “first dividend” of the recent peace agreement between the US and Iran has already been reflected in a reduction in petroleum prices announced by the prime minister,

Aurangzeb said objections raised by some members regarding budget figures were misplaced, adding that no changes had been made to national accounts or key economic indicators.

He thanked lawmakers for participating in the budget debate and said several proposals from members would be considered for inclusion in the finance bill.

On economic targets, Aurangzeb said remittances had reached $4.25 billion last month and expressed confidence that the annual target of $41 billion would be achieved.

He added that IT exports had increased by 20 per cent and were expected to exceed $4.5 billion, while freelancers had recorded earnings of $1.6 billion.

Read More: Opposition, treasury clash over Rs5.9tr budget

He said the Federal Board of Revenue’s (FBR) performance had improved, noting that the government collected an additional $14 billion in revenue over the past two years. He compared this with earlier periods, saying similar increases took 23 years (1988–2011) and 13 years (2011–2024), respectively.

The finance minister said ongoing reforms were focused on bringing retailers into the tax net and strengthening the revenue system.

He also announced agriculture-related relief measures, describing the sector as the backbone of the economy. These include collateral-free loans worth up to Rs300 billion for small farmers, expected to benefit around 750,000 farmers.

Under the Prime Minister’s Youth Agriculture and Business Loan Scheme, Rs109 billion has been allocated. Additional measures include Rs9.5 billion for agricultural credit subsidies, Rs15.8 billion for fertiliser price stabilisation, and Rs10 billion for urea subsidies.

He said Rs4.2 billion had been allocated for agriculture and livestock projects, while nearly Rs2 billion in import duty relief had been provided for agricultural machinery. Duties on high-horsepower tractors, combine harvesters, irrigation pumps and spare parts had been removed.

Aurangzeb said Rs 7.1 billion would be spent on building agricultural cold storage with private sector participation. He said construction and housing remained key economic multipliers and that taxes in the sector had been made “reasonable and balanced”, while the Prime Minister’s housing programme aimed to provide low-cost housing.

Aurangzeb also outlined broader fiscal allocations, including major spending on debt servicing, judiciary, and constitutional institutions, while reiterating that fiscal discipline remains a key government priority.

He said feedback from inside and outside parliament indicated the budget was “positive and pro-growth” and aimed to support sustainable economic expansion. He added that the government had set a clear direction for economic policy under PM Shehbaz and reported improvements in key indicators.

Aurangzeb said large-scale manufacturing had grown by around 6.5 per cent, marking a four-year high, while the external account remained stable and the current account surplus had continued for the first 11 months of the financial year.

He also announced reforms in pension facilitation, including easier Proof of Life certification for retired employees using facial recognition to address biometric verification challenges.

The minister said taxes had been reduced on contraceptives and life-saving medicines. He added that a tenured track system had been introduced in higher education, with a 35 per cent salary increase for professors and other academic staff.

Aurangzeb thanked Senate and National Assembly committees on treasury and assets, saying their recommendations would be incorporated into the Finance Bill or considered in future tax policy. He also thanked parliamentary leadership, cabinet members, officials of the Federal Board of Revenue, and the Tax Policy Office for their role in the budget process.

He said parliament’s contribution to austerity, including budget allocations of Rs5 billion each for the Speaker and Senate Chairman, was a positive step. He concluded by calling for continued cooperation among all stakeholders to ensure a prosperous future for Pakistan.

NA exceeds allotted time as budget debate continues

The National Assembly session began under the chairmanship of Speaker Sardar Ayaz Sadiq, during which it was stated that 40 hours had been allocated for the budget debate, while members have already participated in more than 53 hours of discussion.

Members of the National Assembly used a total of 53 hours in budget debate proceedings. The allocation for Pakistan Tehreek-e-Insaf (PTI) members was 9 hours 32 seconds, while PTI lawmakers utilised 14 hours 40 minutes, exceeding their allocated time by 5 hours 41 minutes and 28 seconds.

Out of 77 PTI members, 67 have already expressed their views, while efforts to contact the remaining members have continued for the past three days. Calls were also made to PTI members over the last two days to obtain their input.

The speaker informed the House that Senate recommendations have been received and members will participate in the debate and propose suggestions.

Debate on Senate budget recommendations

During discussion on Senate budget recommendations, members presented differing views.

Aaliya Kamran said all Senate recommendations were good.

Umair Niazi said Senate recommendations should be given importance under the principle of provincial autonomy, but added that the recommendation to reduce tax on battery imports suggested the Senate was protecting a specific business interest.

Naima Kishwar said a 15 per cent increase in salaries would be better, adding that the Provincial Finance Commission has not been held for 15 years and called for higher taxes on cigarettes.

Aamir Dogar said the Senate had given 140 recommendations, including a reduction in petroleum levy from Rs 123 to provide relief to the public, lowering telecom advance tax from 15 per cent to 8 per cent, and concerns over legislation allowing telecom companies to acquire property.

He called for removal of agriculture taxes, restoration of tax exemptions for university faculty, reinstatement of medical allowance for federal employees and pensioners, a 15 per cent salary increase for government employees, increased funding for the Karachi-Hyderabad Motorway, completion of the Iran–Pakistan gas pipeline, and a petroleum import agreement with Iran.

Asad Qaiser said taxes should be imposed on finished tobacco products instead of the crop, noting that the Khyber Pakhtunkhwa Assembly has declared tobacco an agricultural product.

Barrister Gohar Ali Khan said a climate fund should be established, adding that no province can deal with disasters alone and that federal and provincial governments must work together.

Debate on interest-based system

Ali Muhammad Khan said Pakistan’s system remains interest-based despite being an Islamic country, adding that those involved in interest should be prepared for accountability before God.

He said that under the 26th Amendment, the country is bound to eliminate interest by 2028 and called on political parties and the finance minister to work together on ending the system.