Latest news with #FederalBudget2025-26
Business Recorder
2 days ago
- Business
- Business Recorder
LCCI underscores need for a balanced, strategy-driven budget
LAHORE: A balanced and strategy-driven federal budget is essential for Pakistan's economic future, as it can define the country's direction and stabilize a struggling business climate. This was upshot of the speeches delivered by the LCCI Acting President Engineer Khalid Usman, Vice President Shahid Nazir Chaudhry, former LCCI President Muhammad Ali Mian, former Senior Vice President Ali Hussam Asghar and experts from different sectors while speaking at the awareness session on the upcoming Federal Budget 2025-26, organized by the Lahore Chamber of Commerce and Industry. Executive Committee Members Asif Malik, Firdous Nisar, Sheikh Muhammad Fayyaz, Abdul Majeed, Karamat Ali Awan, Syed Hassan Raza, Syed Salman Ali. Ehtsham ul Haq, Rana Muhammad Nisar, Shouban Akhter, former EC members Naeem Hanif, Malik Muhammad Usman, Yousaf Shah and Chaudhry Muhammad Arshad were also present. Speaking at the session, Acting President Engr. Khalid Usman said that the key pillars of the budget should include expansion of the tax net, relief for existing taxpayers, protection of domestic industry, elimination of duties on imported raw materials, growth of GDP and exports meaningful economic reforms. He said that tariffs must be used as a policy tool to protect domestic industries and reduce Pakistan's reliance on imports. He advocated for zero-rating customs duties and sales tax on raw materials to ensure cost-effective industrial production. He also called for targeted incentives and protections for SMEs and the auto sector which are critical for employment and economic resilience. While talking about the government's reported plan to offer electricity at five cents per unit for crypto mining, he questioned why such a competitive rate is not being extended to local industries, which are far more impactful in terms of job creation and economic contribution. He said that LCCI was the first chamber to submit budget proposals to the government. These included recommendations for reducing the cost of doing business, improving the ease of doing business, enabling SME growth using digital technology to minimize human interaction in tax administration. The LCCI also emphasized simplifying regulatory frameworks and promoting deregulation to encourage industrial expansion. Vice President Shahid Nazir Chaudhry said that high operational costs and unpredictable tax policies have discouraged both local and foreign investors. He urged the government to craft a budget that offers long-term predictability, particularly in taxation. He stressed the importance of stakeholder consultation, especially with the business community, before implementing any new tax regime. He said that unless energy costs and policy instability are addressed, Pakistan's manufacturing sector will remain uncompetitive in regional and global markets. He further added that restoring business confidence requires continuity in policy and a fair taxation system that supports genuine businesses instead of penalizing them. Former LCCI President Muhammad Ali Mian talked about tariff rationalization and gave various suggestions. He called for a pro-growth and industry-friendly federal budget that supports macroeconomic stability, promotes investment strengthens the country's industrial backbone. Former LCCI President Ali Hussam Asghar said that Pakistan's export potential remains largely untapped due to inconsistent policy frameworks and lack of facilitation for exporters. He said that enhancing exports is the only sustainable way to address Pakistan's trade deficit and foreign exchange challenges. Reviewing the current fiscal performance, participants said that according to FY 2024–25 budget documents, the FBR was initially tasked with collecting PKR 12,970 billion, later revised down to PKR 12,334 billion. The targets included PKR 5,454 billion from income tax, PKR 4,919 billion from sales tax, PKR 1,591 billion from customs duties PKR 948 billion from federal excise duty. However, in the first eleven months (July 2024 to May 2025), FBR collected only PKR 10.23 trillion, falling short by over PKR 1 trillion. The LCCI also called for an increase in the withholding agent turnover threshold from PKR 100 million to PKR 250 million to reduce the compliance burden on smaller businesses. It stressed the importance of timely issuance of tax refunds to exporters to ease cash flow constraints and encourage reinvestment into business operations. Economic policies, the Chamber said, should be designed with at least a 10-year continuity framework to ensure predictability and stability. The LCCI further demanded the abolition of the 1.8% non-refundable. Copyright Business Recorder, 2025
Business Recorder
28-05-2025
- Business
- Business Recorder
SAI submits comprehensive proposals for federal budget
ISLAMABAD: The SITE Association of Industry (SAI) has submitted comprehensive budget proposals for the Federal Budget 2025-26, advocating for policy measures to stimulate industrial growth and enhance Pakistan's export competitiveness. In budget recommendations, SAI President Ahmed Azeem Alvi and former president Riaz Uddin, who chairs the association's taxation committee, emphasized the need to transform budget-making into a strategic economic tool rather than maintaining it as a routine fiscal exercise. The industry body emphasized the institutional separation of tax policy formulation and tax administration to avoid conflicts of interest and align with global best practices. Drawing comparisons with the UK and other neighbouring countries' models, SAI suggested the establishment of a structure where tax policy rests with the Ministry of Finance, revenue sharing is managed by an independent finance commission, and consumption taxes are regulated by a dedicated council. Addressing structural weaknesses in the taxation system, SAI noted that Pakistan's income tax base remains narrow-just 9 to 10 percent of GDP- while the formal industrial sector bears a disproportionate tax burden. The association recommended widening the tax net to include all untaxed and under-taxed sectors and capping the maximum income tax rate on business income at 25 percent over the next three years. It further proposed the abolition of the Super Tax, terming it an outdated and unjust burden, and called for relief on inter-corporate and individual dividend taxation. Ahmed Azeem Alvi and Riaz Uddin expressed serious concerns about recent amendments to the Income Tax Ordinance through Ordinance IV of 2025, particularly changes to Sections 138(3A), 140(6A) and 175C of the Income Tax Ordinance. According to SAI, these amendments grant excessive powers to tax authorities and contravene Articles 4, 18, and 77 of the Constitution. The association demanded that the amendments be withdrawn immediately, arguing that they could deter compliance, encourage informality, and diminish investor confidence. Regarding sales tax reforms, SAI leaders pointed out persistent challenges due to overlapping federal and provincial jurisdictions. It proposed a harmonized General Sales Tax (GST) structure supported by a single compliance portal, enabling seamless cross-jurisdictional input tax adjustments. The association stressed the need for expeditious refund mechanisms, with refund payment orders (RPOs) to be issued within five working days of claim submission and payments processed shortly thereafter. Concerns were also raised about the prevailing 22 percent combined sales tax and further tax rate, which the association believes fuels evasion and hinders formalization of the economy. A review of the tax rate structure was urged to reduce distortions and incentivize registration. SAI Chief urged the government to implement progressive reductions in the sales tax rate, targeting a 15% rate over the next three years. The association argues that this reduction will help lower the cost of doing business for the formal tax-paying sector and promote overall economic growth. He also called for the abolition of the additional sales tax, which it claims encourages the continuation of the informal sector by allowing businesses to evade registration and tax obligations. According to the association, this perpetuates a cycle of non-compliance, hindering the formalization of the economy. Furthermore, the association recommends that sales tax exemptions on essential goods, including basic staple foods, pharmaceuticals, and education-related products, should be maintained. These exemptions are seen as crucial in providing a safety net for the common man, particularly in the face of inflationary pressures. SAI also requested the restoration of zero-rating on export facilitation schemes and educational stationery, as promised by the Finance Minister in his budget closing remarks in June 2024. The association believes that reinstating these exemptions will promote the export sector and ease financial burdens on educational institutions. In addition, the association proposed the introduction of a lower sales tax rate of 5% for other essential and deserving items to further reduce the financial strain on consumers. The industry body called for the removal of area-specific sales tax exemptions in the former tribal areas (FATA/PATA). The association stresses that such exemptions should not continue in any form, in line with the broader goal of tax uniformity and fiscal reform across the country. Ahmed Azeem Alvi and Riaz Uddin also emphasized for comprehensive reforms in Pakistan Customs, highlighting outdated legislation, tariff fragmentation, under-invoicing, and ineffective enforcement as key challenges. It recommended a revision of the Customs Act to align with WTO and WCO standards, simplification of duty structures, and adoption of a unified valuation and appraisal system. SAI advocated for the port of entry to be designated as the sole revenue collection point to prevent revenue leakage and ensure smooth inland movement of goods. On social welfare schemes, they criticized the current management of employee welfare programs (EOBI, PESSI/SESSI, WWF, and WPPF) as inefficient and outdated. The schemes largely funded by employers, offer minimal influence to contributors over fund management and disbursement. The association proposed the integration of these schemes into a unified authority with digital interfaces, central governance, and tripartite representation from employers, employees, and regulators. Disbursements, it suggested, should be made via mobile payment platforms, while health and related services could be outsourced to third-party providers. The budget proposals underscore SAI's position that economic policy should balance revenue needs with industrial growth objectives, particularly through measures that enhance Pakistan's export potential and attract productive investment. Copyright Business Recorder, 2025
Business Recorder
24-05-2025
- Business
- Business Recorder
LCCI says optimistic about govt's response to budget proposals
LAHORE: The Lahore Chamber of Commerce and Industry has expressed optimism the federal government would incorporate its recommendations into the upcoming budget to stimulate economic growth and industrial development. LCCI President Mian Abuzar Shad, Senior Vice President Engineer Khalid Usman and Vice President Shahid Nazir Chaudhry said that the recommendations for Federal Budget 2025-26 have already been forwarded to the government and concerned departments. They hoped that these recommendations would be given due consideration to address the country's pressing economic challenges. The LCCI's budget proposals come at a time when Pakistan's economy shows signs of gradual recovery, with GDP growth improving from 0.21% in 2022-23 to 2.38% in 2023-24. The current account deficit has also narrowed significantly, dropping from $3.27 billion to $1.69 billion with a surplus of $1.2 billion recorded in the first half of the current fiscal year. 'Despite these positive indicators, the economy remains vulnerable due to stagnant industrial growth, soaring public debt exceeding Rs 70 trillion and a persistent trade deficit of $24 billion in 2023-24. The industrial sector, a critical driver of economic activity, expanded by a mere 1.21%, while large-scale manufacturing saw negligible growth of 0.07%, underscoring the need for urgent policy interventions', the LCCI office-bearers added. To address these challenges, the LCCI has proposed a series of strategic measures. On the tariff front, the LCCI advocates for a cascading duty structure, with raw materials taxed at 0%, intermediate goods at 5-8% and finished products at 18% to encourage local value addition. It also calls for duty-free imports of wastewater treatment plants to help industries meet environmental standards and maintain export competitiveness. Additionally, the LCCI stresses the importance of protecting the local pharmaceutical industry by maintaining tariff shields on 22 essential active pharmaceutical ingredients (APIs) to reduce import dependency and ensure health security. In terms of policy reforms, the LCCI has stressed the need for reducing the policy interest rate to 6% to lower borrowing costs and stimulate private-sector investment. The LCCI has also recommended regionally competitive energy tariffs to align Pakistan's industrial costs with those of neighboring countries like India and Bangladesh. Other key proposals included reinstating the Final Tax Regime for exporters to simplify compliance, introducing a fixed tax regime for traders to broaden the tax base and capping individual and association taxes at 29% to prevent brain drain and encourage documentation. The LCCI has also highlighted the importance of promoting electric vehicle adoption, starting with public transport and two-wheelers alongside incentives for local EV manufacturing. Procedural improvements form another critical component of the LCCI's recommendations. The LCCI has called for the full digitization of the Federal Board of Revenue to minimise human intervention and curb corruption. It has also urged the government to expedite tax refunds, particularly for exporters, by ensuring that the FASTER system processes refunds within 72 hours, with compensation for delays. The LCCI has further proposed abolishing the Sindh Infrastructure Development Cess for exporters, automating sales tax filings and extending audit cycles to five years to reduce harassment of compliant businesses. Sector-specific recommendations included measures to support the IT and freelancing industry, such as allowing foreign exchange accounts and offering rebates to IT exporters to counter capital flight. In agriculture, the LCCI has advocated for a progressive income tax on large landholdings while exempting small farmers. The real estate sector has been advised to align property valuations with market rates to document hidden wealth, while the textile industry has been recommended for the reinstatement of the Drawback of Local Taxes and Levies scheme and an increase in duty drawbacks to 3%. LCCI President Mian Abuzar Shad has also stressed the need for broader macroeconomic reforms, including the privatisation of loss-making state-owned enterprises (SOEs) to reduce fiscal burdens, curbing non-essential government expenditures and cracking down on smuggling networks that cost the economy billions annually. Engineer Khalid Usman that the proposals are designed to foster growth through equity, efficiency and ease of doing business, calling for decisive government action to address debt, expand the tax net and boost exports. Vice President Shahid Nazir Chaudhry said that Pakistan's economic survival hinges on industrialisation and stable, long-term policies rather than ad hoc measures. Copyright Business Recorder, 2025
Express Tribune
15-05-2025
- Business
- Express Tribune
IBA Karachi hosts pre-budget seminar
IBA Karachi hosted a pre-budget seminar, "Pakistan Economic Outlook for Budget 2025-26", critically examining Pakistan's economic landscape and the upcoming Federal Budget 2025-26 at the main campus, organised by the Centre for Business and Economics Research (CBER) at School of Economics and Social Sciences (SESS). Given the targets set, Former Finance Minister Dr Miftah Ismail highlighted the challenge the government may face in meeting the revenue targets in the upcoming fiscal year. He emphasised that Pakistan already has higher tax rates than its regional counterparts.
Business Recorder
04-05-2025
- Business
- Business Recorder
Haroon highlights economic roadmap, reiterates PM's ‘inclusive progress' vision
LAHORE: Haroon Akhtar, Special Assistant to the Prime Minister on Industry and Production, outlined the government's economic roadmap on Saturday emphasizing a shift from stabilization to growth-oriented policies in the upcoming budget. Akhtar reiterated Prime Minister Shehbaz Sharif's vision of 'inclusive progress' by engaging all stakeholders and minimizing bureaucratic intervention across sectors. He was addressing the consultative session on Federal Budget 2025-26 organised by Federal of Pakistan Chambers of Commerce and Industry (FPCCI) regional office. Akhtar highlighted the critical role of Small and Medium Enterprises (SMEs), calling them the 'lifeline of industry,' and vowed targeted support to bolster their productivity. He confirmed that the previous budget focused on economic stabilization, while the upcoming budget will prioritize development, export promotion, and industrial revival. To boost exports, the government plans to position exporters in an 'ideal position' through strategic measures, with special attention on expanding shipments of halal meat, dairy products, mangoes, onions, and citrus fruits. Tax incentives for electric vehicles and efforts to revive closed industries were also announced as part of the strategy to stimulate manufacturing and job creation. Regarding sustainable energy, Akhtar revealed that a proposal to produce biogas from manure is under consideration, which could significantly reduce petroleum import costs. 'Expert input will guide policy decisions to ensure efficiency and competitiveness,' he added, stressing the government's commitment to a private-sector-led growth model. Speaking on the occasion Saqib Fayaz Magoon, FPCCI's Senior Vice President, underscored the critical role of pre-budget proposals, lamenting that past recommendations had yielded limited implementation despite their importance. He emphasized that this year's proposals were crafted with IMF conditions in mind, stressing the need for long-term industrial policies to ensure sector stability. 'Industries are built for lifetimes, not just 5 or 10 years,' he asserted, calling for cross-party consensus to insulate economic and industrial policies from political changes. Magoon criticized structural flaws in the Export Finance Scheme (EFS), citing its adverse impact on ginning and spinning sectors, where 50% of units have reportedly shut down. He urged the immediate abolition of the 18% sales tax on local industries under EFS and advocated for a review of energy tariffs to alleviate production costs. Highlighting bureaucratic inefficiencies, he demanded that the Federal Board of Revenue (FBR) consult stakeholders before issuing Statutory Regulatory Orders (SROs), which he deemed 'unworkable' in their current form. He also proposed reducing the 4% sales tax burden on unregistered businesses to broaden the tax net. Zain Iftikhar, FPCCI's Regional Chairman, called for shifting focus to agriculture, terming it the 'backbone' of Pakistan's economy. He highlighted systemic challenges faced by farmers, including inadequate crop prices, which he claimed deprive them of resources for future cultivation. Iftikhar called for abolishing the 17% sales tax on seeds and reducing GST on fertilizers, whose prices have surged by 250% since 2020. He pushed for lower electricity tariffs for tube wells, increased adoption of modern agricultural technology, and tax cuts on diesel, which is predominantly used in farming. To support smallholders, he urged the federal government to introduce interest-free loans for farmers. Earlier, Special Assistant to the Prime Minister for Industries and Production, Haroon Akhtar Khan, introduced the Prime Minister's SME Development Vision during a media talk at the Small and Medium Enterprises Development Authority (SMEDA) office on Saturday, ahead of the SMEDA Board of Directors' meeting. He was accompanied by Federal Secretary for Industries and Production, Saif Anjum, and SMEDA's Chief Executive Officer, Suqrat Aman Rana. Copyright Business Recorder, 2025
