KARACHI: Business leaders have advised the government to avoid surprises in the upcoming federal budget by proposing significant relief for the salaried class, including a reduction in the general sales tax (GST) and the phasing out of the super tax.

In addition to balancing the external account and managing the fiscal deficit, Pakistan Business Council CEO Ehsan Malik stated that there is now an urgent need to augment defence spending through higher export earnings.

The PBC’s budget proposals aimed to fiscally incentivise the rapid growth of exports and the indigenisation of inputs. Given the constraints on the fiscal account, the council sought a gradual reduction in corporate and super taxes, as well as the withdrawal of multiple taxation on inter-corporate dividends.

Relief was requested for salaried employees, as was a reduction in GST, which at 18pc incentivised evasion. He emphasised that a higher tax-to-GDP ratio should be the result of business growth, not the outcome of further taxes on those already taxed.

Leaders demand tax relief for salaried class and industries

Overseas Investors Chambers of Commerce and Industry (OICCI) Chief Executive/Secretary General M. Abdul Aleem has recommended a fresh approach in this year’s budget, urging bold measures to expand the tax net by ensuring proper tax collection from the trade, services, and agriculture sectors.

He also proposed tax relief for the salaried class and the rationalisation of industry taxes in line with regional norms.

He sought a gradual reduction in corporate and sales tax rates, along with the phasing out of the super tax in three years.

“We urge the government not to throw in surprises and engage all the stakeholders for tax reforms along with ensuring policy consistency,” Aleem added.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Senior Vice-President Saquib Fayyaz Magoon said the focus should be on boosting exports as the government has been claiming it would not go to International Monetary Fund (IMF) in the future after the completion of the ongoing $7bn Extended Fund Facility.

“In this scenario, the government should frame policies to develop the export sector,” he added.

He urged the government to avoid “new taxes” on export-oriented sectors as they would increase production costs and make goods uncompetitive globally.

Karachi Chamber of Commerce and Industry (KCCI) President Jawed Bilwani stressed the need to enhance industrial competitiveness, promote exports, broaden the tax base, and eliminate structural inefficiencies in the economic framework.

The past fiscal year has seen significant macroeconomic improvements, offering an opportunity to implement targeted policy interventions that can drive sustained economic growth.

“We strongly advocate for a broad-based, transparent, and predictable tax framework that expands the tax net, removes distortions, and fosters a fairer distribution of the tax burden,” he said, adding that rationalising aggressive tax regimes, eliminating inefficiencies, and simplifying tax procedures will be essential in ensuring a pro-growth fiscal environment.

Mr Bilwani noted that the SME sector, which serves as a backbone of economic activity and employment, continues to struggle due to limited access to finance and an unsupportive regulatory framework.

Site Association of Industry (SAI) President Ahmed Azeem Alvi urged the government to prioritise industrial growth and exports in the budget for FY26 by widening the tax base, capping business income tax at 25pc, abolishing the Super Tax, and reversing recent controversial amendments to the Income Tax Ordinance.

He called for a harmonised GST system, faster refunds, gradual reduction of sales tax to 15pc, and abolition of the additional sales tax to reduce informality.

He demanded an end to Fata/Pata tax exemptions, overhauling welfare schemes, and adopting digitalisation, and a one-window operation. Ahmed also urged the restoration of zero-rated status for export sectors and essential goods.

Published in Dawn, May 31st, 2025