Businessmen voice mistrust over upcoming budget for FY27

Pakistan’s business community has expressed its mistrust on the upcoming budget, saying the export earnings would continue to decline if the government continued to present the old tax-heavy budget with its primary focus on setting and achieving overambitious tax collection targets.

They demanded the government to take industry representatives on board in preparing the budget to double the export earnings to $60 billion over the next fiscal year 2026-27 (FY27).

“We have submitted export-led growth budget proposals to the government for the upcoming fiscal year [FY27],” said Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Senior Vice President Saquib Fayyaz Magoon while presenting budget proposals at a press conference in the Karachi Press Club (KPC) on Thursday.

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“We can easily increase export earnings to $50-60 billion in FY27 if the budget presentation ensures providing energy (power and gas utilities) to industry at competitive price in the region, and if the cost of doing business is controlled through reducing tax rates and interest rate on bank financing is slashed [into single digit],” added Magoon, who is also chairman of the Businessmen Panel Progressive (BMPP).

Key demands:

• Take industry representatives on board in preparing budget
• Present export-led growth budget
• Avoid heavy tax collection targets
• Incentives for new exporters
• Cut General Sales Tax to 15% from 18% at present
• Remove Super Tax
• Rationalise FATA/PATA incentives
• 10-15% increase in monthly wages of industry workers
• Increase limit of monthly tax exempted income to Rs100,000 per month for salaried class

The export earnings would continue to decline if the government continued to present the old tax-heavy budget with its primary focus on setting and achieving overambitious tax collection targets, he maintained.

“This practice should come to an end. Instead, the government should focus on local production for import substitution and export-led growth through incentivising industries and rationalising tax rates for them.” Magoon said.

Furthermore, FPCCI official said the country’s exports had decreased 5.6% to $27.9 billion in the first 11 months of the fiscal year 2025-26, compared to $29.56 billion in the same period of the previous year.

“The exports may further drop by 20-30% in FY27,” he warned.

He said the government invites the business community to make budget proposals almost every year. “But, it is never known whether the proposals are accepted or rejected. This practice should end.”

“The government should take the business community on board to make the budget. It should set export, economic growth, and tax collection targets in strong consultation with the business community,” he said, adding “the current practices show the budget is prepared in consultation with the IMF”.

Magoon was of the view that the current economic conditions discourage businessmen from becoming exporters.

“New exporters submit tax-returns manually. Accordingly, they do not get returns and refunds. They should be given incentives in initial years to become successful exporters.”

He proposed to cut the rate of General Sales Tax (GST) to 15% from 18% at present, dismissing the IMF recommendation of increasing the tax by one percentage point to 19% in FY27.

FPCCI official said the Super Tax should be removed, at least on industries, to support industry and the country take a growth path, going forward.

Magoon urged the government to rationalise the incentives given to Federally Administered Tribal Areas (FATA)/Provincially Administered Tribal Areas (PATA), saying such incentives were being misused.

“The FATA/PATA region should be given incentives based on quota in ratio of their production and population.”

He continued to say that there was a wide difference of 6-7% in tax on import by the industry and by the commercial importers.

“This gap should be rationalised at least for plastic, steel, artificial leather and polyester yarn manufacturing industries,” he stressed. “Monthly wages of industry workers should be increased by 10-15% to let them absorb the current waves of inflation.”

Businessman Aman Paracha proposed the government to increase the limit of monthly tax exempted income to Rs100,000 per month for salaried class people and cut the maximum tax rate to 25% from 35% on them at present.

Businessman Shabbir Mansha urged the government to maintain consistency in business policies, adding there was no clarity on policy reform targets. “There is mistrust between taxpayers and tax collectors.”

“Earlier, the government asked to solarise industries. Now it is considering increasing tax rates on them. The government continued to provide incentives on investment in real estate for the first 70 years of the country. Now, for the last 5 years, it’s been saying the investment in real estate is counterproductive. The government provided investment at 2-3% under TERF (Temporary Economic Refinance Facility) during Covid-19. Now it is charging 11% on the financing,” Mansha said.