Finance Minister Muhammad Aurangzeb is currently addressing a post-budget press conference to expand upon the proposed federal budget for the next fiscal year, after journalists staged a walkout.
According to a Dawn.com correspondent, the reporters voiced their concerns about not being given a technical briefing yesterday by the Federal Board of Revenue (FRB) on the Finance Bill 2025, which details the legislation for the proposed measures under the budget.
Subsequently, they walked out of the conference room in protest.
However, flanked by FBR Chairman Rashid Mahmood Langrial and Finance Secretary Imdadullah Bosal, Aurangzeb soon continued with his press conference in the presence of some journalists.
He reiterated the significance of the tariff reforms under the National Tariff Policy. “People ask us that the revenue will decline but if we have to take this country forward towards an export-led discussion […] I want to go into the details of the steps we have taken.”
The minister noted that additional customs duties were removed in four “lines”, while they were reduced in 2,700 tariff lines, which were “directly linked with those raw materials on the basis of which exporters will benefit”. He stressed these steps were just for the upcoming year and more measures will be taken eventually.
Echoing his remarks from yesterday, Aurangzeb stressed that the government tried to give relief “as much as possible” while considering the fiscal space. He also pointed out the 0.5pc reduction in super tax for the corporate sector.
Detailing the measures proposed for property buyers and sellers, he said: “Selling side still gets capital gains but the buying side should get some relief.”
The minister also termed the mortgage financing “as important as the fiscal side of things and what we have to do on the taxation side”.
Speaking on the agricultural sector, Aurangzeb said an additional tax on fertilisers and pesticides was a “benchmark” but it was negotiated with the International Monetary Fund (IMF) on the directions of Prime Minister Shehbaz Sharif that it was a “critical input into agriculture” and should not be imposed.
“Again, this is a step in the right direction”, the minister asserted.
Aurangzeb acknowledged that additional taxes and measures were also talked about last year. “We had to impose those as when we were speaking to international institutions, they were not agreeing with our stance that there can be enforcement in this country,” he said.
Expressing the aim to reach a tax-to-GDP ratio of 10.9pc by the next year, the minister said additional taxes were around Rs312m of the total 2.2tr target. “We have two ways — either we ensure enforcement or we introduce additional measures. This is why we will go to the parliament to help us out with the enabling amendments and legislation.”
The minister added: “We have laws, legislation and taxes but we were not able to enforce it, so in this fiscal year, we have worked on enforcement, which has exceeded Rs400 billion.”
Responding to a query, Aurangzeb underscored the need to reduce the role of the middleman in the agricultural sector and increase the financing for small farmers. “It is very critical […] that we have a policy in the devolved subjects.”
He noted that the relevant measures were underway, hence the growth target was decided considering that.
On salaries and pensions, the finance czar stressed the need for a benchmark.
“If we are saying the inflation is declining, similarly, the salary or pension has to benchmarked with inflation. This is not just the rule in Pakistan but across the world.”
Acknowledging that past concerns about the government expenditures not reducing were the “right pushback”, the minister highlighted that the figure had gone up by just 1.9pc in the outgoing fiscal year.
The budget
Maintaining an aggressive stance on fiscal consolidation, as required by the International Monetary Fund (IMF), Aurangzeb yesterday still managed to offer some notional relief to the salaried class in the federal budget for fiscal year 2025-26, along with incentives for the real estate and construction sectors, in an effort to revive the struggling industrial sector and stimulate economic growth.
At the same time, however, the government announced it was imposing a ‘carbon levy’ of Rs2.5 per litre on petrol, diesel and furnace oil in the upcoming fiscal year, to be doubled the following year.
It also introduced a 5 per cent tax on large pensions, an 18pc tax on imported solar panels, and an increase in the debt servicing surcharge on electricity to finance not only interest payments, but also principal debt. Additionally, it announced the gradual elimination of tax exemptions for the tribal areas beginning this year.
More to follow
