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Express Tribune
a day ago
- Business
- Express Tribune
Budgets pass, hopes fade among ordinary citizens
Federal and provincial budgets for fiscal year 2025-26 have been passed by assemblies, each one claiming to be providing a huge relief to an ordinary Pakistani citizen or household, but the ground reality suggests otherwise. A large number of ordinary citizens have expressed scepticism about the immediate effect on their strained household budgets. In the backdrop of a persistently high inflation, officially recorded at 3.5% in May 2025, and a total budget outlay of Rs17.5 trillion, the government's balancing act between fiscal consolidation and public relief measures has left many feeling underwhelmed. For salaried workers like Tariq Sikandar, earning Rs120,000 per month, the budget offers a rare positive. "My tax burden will drop by nearly Rs2,500 per month," he said, while referring to the government's decision to increase the income tax exemption threshold to Rs600,000 annually and lower tax rates for middle-income brackets. "It's a small relief, but in this economy, every rupee counts," he added. This adjustment, part of broader efforts to formalise the tax net, benefits approximately 67 million salaried individuals. However, in Pakistan, a majority of the workforce is earning less than Rs50,000, with no regular yearly increments, especially in the private sector. For female household members like Fatima Bibi, managing a family of five, the budget fails to address her primary concern, ie, soaring kitchen expenses. "Flour, sugar and cooking oil are still painfully expensive," she said, adding "the government's claims of providing relief sound good, but the reality does not match their claims, even milk and yogurt prices since the announcement of budget have increased, how can they control this mess." While the government has allocated Rs1.186 trillion for subsidies in FY26, a large chunk of that goes to the power sector, with no amount earmarked for utility stores. For over 70% of population, as of today, relief means a substantial reduction in prices of food basket, petrol and electricity. Till such relief is provided, which is highly impossible considering the global situation and the country's deficits, the government's moves may not be considered people-centric. On the other side, industrial workers, too, voice apprehension. Aslam Hussain, employed at a Faisalabad textile factory, questions the budget's job creation promises. "They talk of 5% export growth target and industrial support, but our factory hasn't raised wages for two years," he stated. The billions of rupees allocated for the export industry support package focus on technology upgrades, which workers like Hussain fear may not translate into higher incomes. "Without wage increases, how can we match the growing inflation, how will our condition get better, there should be a mechanism to control the private sector too, when it comes to matching wages," he emphasised. Transporters, squeezed by energy costs, say imposing an additional levy means cutting down the already shrinking margins. Haider Raza, who operates a mini-truck between Peshawar and Rawalpindi, points to the hike in petroleum levy, expected to surpass Rs100 per litre. "Diesel prices will rise again and my profit margin vanishes, every time this happens. The government defends the levy as necessary to meet its tax collection target, but for small transporters, it's a direct hit to livelihoods," Raza added. Economists also acknowledge the budget's tightrope walk. Dr Ayesha Ali, an economist, said that the 4.2% GDP growth target and the reduced budget deficit at 3.9% show the commitment to stability. "But heavy reliance on indirect taxes, like the 18% standard sales tax, hits low-income households the hardest." She notes that while the Rs1 trillion development budget is aimed at long-term growth, immediate relief measures like the Benazir Income Support Programme (BISP) stipend, adjusted for inflation, remain insufficient for the poorest 20% of families. Ayesha added that for an average Pakistani, the FY26 budget feels like a blend of modest gains and missed opportunities. "Tax relief for salaried class is a tangible win, yet it's overshadowed by the reality that indirect taxes and inflation will continue to dominate daily expenditures. Structural reforms take time, but households need a respite now. Without sharper targeting of subsidies and price controls, inequality pressures will not ease. In markets, factories and homes, the consensus is clear; the budget offers breathing space for some, but for most, the struggle persists beneath the weight of bigger economic currents."
Business Recorder
6 days ago
- Business
- Business Recorder
Researchers & teachers: FAPUASA, PUASA condemn govt's decision to revoke tax rebate
LAHORE: The Federation of All Pakistan Universities Academic Staff Association (FAPUASA) Punjab Chapter and the Punjab University Academic Staff Association (PUASA) held a joint press conference at the University Club Committee Room on Monday strongly condemning the federal government's decision to revoke the longstanding tax rebate for researchers and teachers. The associations called upon Punjab Chief Minister Maryam Nawaz to immediately increase budgetary allocations for the province's universities to mitigate the financial crisis in higher education. The press conference was chaired by PU ASA President and former FAPUASA President Prof Dr Amjad Abbas Khan Magsi. Other prominent attendees included FAPUASA Balochistan President Prof Dr Kaleem Ullah Bareach, FAPUASA Punjab President and PU ASA Secretary Dr Muhammad Islam, PU ASA Vice President Dr Ghalib Atta, and GCU ASA President Prof Dr Noman Aftab. The academic leaders expressed deep concern over the inadequate funding and tax-related challenges faced by Punjab's universities. Dr Amjad Magsi highlighted the disparity in financial support, stating that Punjab, despite being the largest province with 51 universities, has been allocated only Rs18 billion as a recurring grant. In contrast, Sindh, with 32 universities, receives more than double that amount at Rs42 billion. The speakers demanded an urgent revision of the recurring grants for Punjab's public sector universities to ensure equitable resource distribution. The tax rebate, initially introduced at 75% during General Musharraf's government in 2006 to encourage research and retain academic talent, was reduced to 40% by the PML-N government in 2013. Now, the current administration has decided to abolish it entirely, a move that reflects a persistent neglect of the academic community. The rebate was not a privilege but a necessity for university faculty and researchers who often bear out-of-pocket expenses for journal publications, research materials, fieldwork, and academic travel. Its removal is expected to demoralize scholars, reduce research output, and exacerbate brain drain, ultimately undermining Pakistan's academic progress. This decision comes amid a severe financial crisis in higher education. Despite the federal budget expanding from Rs5.9 trillion in 2018 to Rs17.5 trillion in 2025 — a 196% increase — the recurring grant for higher education has remained stagnant at Rs65 billion. Meanwhile, the number of public universities has risen from 126 to 160, with operating costs, salaries, pensions, and utility expenses surging significantly. According to the Economic Survey of Pakistan, the country allocates a mere 0.8% of its GDP to education, with only 0.37% dedicated to higher education in the current fiscal year. This falls drastically short of UNESCO's recommended 4–6% and lags behind regional counterparts like India and Bangladesh. Notably, both PML-N and PPP had pledged in their election manifestos to raise education spending to 4% of GDP but have failed to fulfil this commitment while in power. The academic leaders urged the Punjab government to take immediate action to safeguard the future of higher education in the province, emphasizing that continued neglect would have long-term detrimental effects on research, innovation, and national development. Copyright Business Recorder, 2025
Express Tribune
6 days ago
- Business
- Express Tribune
Varsity employees demand budget hike
The Federation of All Pakistan Academic Staff Association (FAPUASA) has demanded and increase in the budgetary allocations for the varsities in Punjab and criticized the federal government's decision to revoke a 25 per cent tax rebate for researchers and teachers. Addressing a press conference at Punjab University, leaders of FAPUASA and the PU Academic Staff Association leaders expressed concern over meagre funding for the universities and the revocation of the tax relief. Former FAPUASA president Dr Amjad Abbas Magsi said that despite being the largest province with the highest number of universities, Punjab government has allocated only Rs18 billion as recurring grant for its 51 universities, while 32 institutions in Sindh have been allocated Rs42 billion. The leaders demanded increase in the allocation of grants for the public sector universities in Punjab. They said 75 per cent income tax rebate introduced in 2006 was aimed at promoting research and academic retention. It was reduced to 40% in 2013 and now the government was abolishing it. They said the rebate was a lifeline for university faculty and researchers who routinely pay out of their pockets for journal publication fees, fieldwork and academic travel. Its abolition will demoralise scholars, reduce research productivity and accelerate the brain drain. The university employees' leaders said that despite the federal budget growing from Rs5.9 trillion in 2018 to Rs17.5 trillion this year, the grant for higher education has remained frozen at Rs65 billion.
Express Tribune
05-05-2025
- Business
- Express Tribune
PML-N, PPP agree on 18% increase in defence spending
The federal government on Monday shared roughly Rs17.5 trillion worth of new budget framework with its key allythe Pakistan Peoples Partywhich endorsed an 18% increase in defence spending due to tensions with India but termed the development allocation insufficient. Like this year, the government is planning to unveil a fiscally-tight stabilisation budget, which is being constructed around a very high primary surplus target, according to a briefing given to the PPP delegation, led by Bilawal Bhutto Zardari. The PPP, which is providing crucial support to the government in the National Assembly, met with Prime Minister Shehbaz Sharif and his economic team to discuss the budget matters. The size of the budget is lower than Rs18 trillion, which is less than this year's budget due to steep reduction in the interest expense on the back of an 11% cut in policy rate by the central bank. However, there was a consensus between the PML-N and the PPP to increase the defense budget due to the recent wave of tensions with India, said the sources. They said that the PPP backed the proposal to increase the defense budget by 18% to over Rs2.5 trillion in the light of the prevailing security threats. Both parties were having divergent views on the next fiscal year's Public Sector Development Programme. The government has proposed Rs1 trillion PSDP; however, the PPP asked for a larger allocation. For this fiscal year, Rs1.1 trillion had been allocated but spending fell far behind the allocation. One of the participants suggested setting the PSDP at this year's actual spending level, which will be significantly lower than the Rs1 trillion proposed allocation. Planning Minister Ahsan Iqbal declined to comment on the PPP's reservation about low development budget allocation. The government is planning to maintain fiscal discipline and create a primary budget surplus double than this fiscal year as part of its understanding with the IMF to lower debt burden. Prime Minister Shehbaz Sharif constituted a committee under the chairmanship of Deputy Prime Minister Ishaq Dar to build a consensus between the PPP and the PML-N on the next budget. The budget will be presented in the National Assembly before Eid holidays. Pensions might be increased by 7% and salaries at this stage are proposed to be raised only 6% aimed at meeting the IMF demand of keeping the employees-related expenditures frozen at this year's level in terms of the size of the economy. However, both the proposed increases may go up from the 6% and 7% levels, said the sources. The average inflation is expected to remain around 5% and the government has linked the increase in salaries with inflation rate. Some members of the PPP delegation also termed the next fiscal year's proposed Rs14.3 trillion tax target unrealistic due to a slowing economy, squeeze being faced by the businesses and negative growth in the large scale manufacturing, said the sources. The PPP also asked the government to prioritise sectors that need to be protected and promoted to get economic growth. It advised the government not to take any adverse measures that can hurt the agriculture sector, said the sources. The PPP also sought tax relief for the salaried class, which was adversely affected by the heavy taxation in the last budget. The sources told The Express Tribune that the government may impose income tax on high-end pensioners but is considering providing some relief to the marginalized salaried persons by enhancing their tax exemption threshold and also lowering rates against various slabs. There are proposals to introduce income tax on pensioners and at the same time reduce the rates for the salaried class, subject to the clearance by the IMF later this month, according to a top official of the Federal Board of Revenue. According to these discussions, the current tax-free monthly salary limit may be enhanced from Rs50,000 to little over Rs83,000. Due to progressivity in the slabs, its benefit will also be available to the people earning higher income. The discussions are also taking place to reduce 2.5% income tax rate against all the existing slab rates. This will effectively reduce the overall effective income tax rate by 3%, said the officials. The income levels against each slab rate are also being recommended to be increased to reduce the burden, said the sources. The salaried class had been hit the hardest in the last budget by the government of Prime Minister Shehbaz Sharif. The government has slapped a 35% tax on monthly income of over Rs333,000, which might be reduced by 2.5% in addition to increasing the tax-free threshold. The 5% tax rate on a monthly income of Rs100,000 had been imposed, which also might be downward adjusted. On a monthly income of Rs183,000, the government had slapped 15% income tax, which could be cut to 12.5%. On monthly income of over Rs267,000, the government charges 25% income tax, which could be reduced to 22.5%. There is also a recommendation to introduce a new slab at 20% rate but this may not pass through the IMF scrutiny that is not in favour of having more than four slabs. On monthly income of up to Rs333,000, the tax rate is 30%, which could be lowered to 27.5%. The government should give relief to the salaried class and go after traders, said PML-N Senator Anusha Rehman on Monday. According to The Express Tribune report, the salaried class paid Rs391 billion income tax in just nine months, which was equal to 10% of the total income tax paid by the entire Pakistan. The traders paid only Rs26 billion, just 0.6% of the total income tax collection. The top FBR official said that the pension was a source of income, which has to be taxed. The proposal to tax pensions had also been floated last year but subsequently it was shelved. The consideration is that compared to normal salaried income, the level of taxation of the pensions should be at least four times less. As against the current monthly tax-free income level of Rs50,000, the authorities want to tax the pensions of over Rs200,000 per month. If approved, this would hit only the high-end pensioners, mostly retired judges, three-star generals and retired grade 21-22 bureaucrats. For the next fiscal year, the government is planning to set a tax target of Rs14.3 trillion. This is Rs2 trillion or 16% higher than this year's downward revised target. The government expects that Rs1.5 trillion or 12% additional collection will come due to nominal increase in the size of the economy. However, the IMF is asking the FBR to finalise proposals for collecting the additional 4% or over Rs500 billion taxes, according to the sources. The sources said that the FBR's enforcement has strengthened, which is evident from 26% annual growth in collection despite 7% nominal economic growth. They believed that the government did not need any measure but the Fund was asking to take measures. Meanwhile, the Senate Standing Committee on Finance on Monday heard the budget related demands of various businesses. The poultry association disclosed that the FBR was charging Rs5,190 tax on a parent-chicken, which was abnormally high. FBR Chairman Rashid Langrial assured to review the issue before the budget. The Pakistan Dairy Association has demanded again to reduce the sales tax on packaged milk to 5% from the world's highest rate of 18%, as the tax imposed last year has adversely affected the sales. Rashid Langrial told the committee that three proposals were being discussed to reduce the rate to 5%, 10% or 15% but no decision has been taken. FBR (member) Tax Policy Dr Najeeb Memon said that the reduction in sales tax rate to 5% would dent revenues by Rs20 billion to Rs30 billion. The association was of the view that with sales going down, the FBR was already not achieving the desired results. The Fruit Juices Council representative Atika Mir recommended lowering the federal excise duty rates to 15% from current 20%, as the heavy taxation has cumulatively reduced the companies' sales by 45% in the past two years. She said that the higher taxation also impacted the farmers due to a 66% reduction in demand for mangoes for making juices. The government, which is facing a huge shortfall, on Saturday took an extraordinary measure and promulgated a Presidential Ordinance to immediately recover taxes from bank accounts of taxpayers after decisions by high courts and Supreme Court of Pakistan. Prime Minister Shehbaz Sharif on Monday directed the Ministry of Information to inform the public about the true perspective of bringing the ordinance.
