Latest news with #FederalBudget2025-26
Business Recorder
19-06-2025
- Business
- Business Recorder
Federal Budget termed detrimental to industry
KARACHI: Former Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and former Senior Vice President of the Karachi Chamber of Commerce and Industry (KCCI), Muhammad Hanif Lakhani has opposed the taxation of petroleum products, arguing that it would adversely affect the general public. Lakhani also expressed disappointment over the State Bank of Pakistan's decision to maintain the policy rate at a high 11%, calling it overly cautious and a negative move that is inappropriate given the declining inflation and weakening industrial competitiveness. He termed the Federal Budget 2025-26 as detrimental to the industry. He criticized the government for granting Federal Board of Revenue (FBR) officers the powers equivalent to a Station House Officer (SHO), essentially allowing them unchecked authority. Additionally, he said the imposition of an 18% tax on the IT sector is an ill-advised decision. Lakhani pointed out that the federal budget contains numerous anomalies that the Ministry of Finance must rectify. He urged the government to withdraw harsh and anti-business tax measures before the Finance Bill is passed in Parliament. He warned that granting such strict powers to the FBR in the name of increasing tax collection will make it extremely difficult to achieve the set tax targets. He also criticized the government for not reducing the interest rate, which he believes should have been brought down to 7%, especially when inflation has declined. He stated that decisions are not being made based on ground realities. Lakhani also highlighted the absence of a policy for alternative energy sources. Instead, the government imposed an 18% sales tax on solar panels, which will increase their prices. Furthermore, he opposed the imposition of taxes on e-commerce transactions, noting that unemployed youth were earning through e-commerce, and the government should either provide jobs or not take away their means of livelihood. He did, however, support the move to bring non-filers into the tax net and stated that the imposition of a 10% sales tax in FATA and PATA is a positive step that will benefit the government and curb smuggling. Copyright Business Recorder, 2025
Business Recorder
14-06-2025
- Business
- Business Recorder
Food sector: PVMA Chairman terms Federal Budget disappointing
KARACHI: Sheikh Umer Rehan, Chairman of the Pakistan Vanaspati Manufacturers Association (PVMA), has termed the Federal Budget 2025-26 disappointing for the food sector, particularly the ghee and cooking oil industry. Expressing serious concerns, he stated that instead of providing relief, the budget proposes measures that will increase production costs, inevitably leading to higher food inflation. While appreciating the governments move to abolish the 'non-filer' category and broaden the tax net, a long-standing demand of the business community. Sheikh Umer Rehan lamented that the core issues of the edible oil industry have been completely ignored in the budget. He highlighted that sales tax refunds have been pending for extended periods, causing severe liquidity challenges for the sector. Additionally, Section 8B of the Sales Tax Act imposes an undue financial burden by requiring manufacturers to pay extra taxes. 'If the government cannot ensure timely payment of refunds, it should at least abolish Section 8B immediately,' he asserted. Sheikh Umer also welcomed the removal of Additional Customs Duty (ACD) on imports in the budget but stressed that this benefit must be extended to the ghee and cooking oil sector. This, he argued, would not only provide relief to the struggling industry but also help reduce prices for consumers. He warned that the edible oil industry is already under immense pressure due to high import taxes, duties on raw materials, and the devaluation of the Pakistani Rupee. Now, with additional levies like the petroleum levy and carbon tax, production costs are set to increase dramatically, making it even harder for the industry to sustain operations. Sheikh Umer said that government has once again overlooked practical measures to boost domestic production of edible oils and to reduce reliance on expensive imports. He pointed out structural flaw in the government's economic planning, stating that the burden of taxation continues to fall disproportionately on the existing formal sector, particularly manufacturers, while the agriculture sector, contributing 25% to the national GDP, remains largely outside the tax net, contributing less than 1% to tax revenues. Sheikh Umer expressed disappointment that while the tax exemptions for the former FATA/PATA regions have been slightly reduced; they have not been entirely eliminated, leaving local manufacturers at a continued disadvantage. He urged the government to reduce indirect taxes and levies on essential food items, provide relief on raw material imports, and bring the agriculture sector into the tax net to ensure a more equitable tax regime. He warned that 'Without concrete measures to support the edible oil industry, controlling food inflation will remain an unattainable goal.' Copyright Business Recorder, 2025
Business Recorder
13-06-2025
- Business
- Business Recorder
Budget: LCCI urges govt to address concerns ahead of NA debate
LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has urged the government to ensure immediate consultations with the business community to address concerns before the National Assembly finalizes the Federal Budget 2025-26 where it would be presented for debate. LCCI President Mian Abuzar Shad, Senior Vice President Engineer Khalid Usman and Vice President Shahid Nazir Chaudhry in a statement called for urgent revisions. They said the government had projected GDP growth at 4.2 percent, up from the current 2.7 percent. They said the budget overlooks systemic flaws. 'The growth estimates ignore ground realities, high cost of doing business, energy shortages and inconsistent policies which are affecting industrial output. The government must revisit these projections to avoid fiscal shortfalls later.' The LCCI office-bearers said the debt servicing still consumed a significant portion of the budget. Mian Abuzar Shad said that IMF-mandated subsidy cuts which would hurt low-income groups. They added that the imposition of an 18 percent sales tax on imported solar panels has also drawn sharp criticism. They said that this move contradicts Pakistan's renewable energy goals, adding 'instead of taxing solar imports, the government should incentivize local manufacturing and R&D to reduce dependence on foreign products.' Mian Abuzar Shad said that below the mark allocations would affect health, education and infrastructure. They said that slashing social sector funding for short-term fiscal adjustments will harm long-term growth. The government must rebalance allocations to prioritize human development. The LCCI office-bearers said the business community was not satisfied on taxation measures at all and there was a dire need of revisiting these with the consultation of stakeholders. They said the growth and tax targets should be revised realistically, focusing on expanding the tax net rather than overburdening existing taxpayers. They demanded of the government to prioritize the construction of new water reservoirs and the modernization of existing infrastructure to address Pakistan's worsening water crisis. With agriculture contributing nearly 24 percent of GDP and employing over 37 percent of the labour force sustainable water management is essential for economic stability. They said the work on Diamer-Bhasha Dam and other pending projects must be fast-tracked to enhance water storage capacity. They also suggested that the Public-private partnerships (PPP) should be encouraged to secure funding and expertise. LCCI President Mian Abuzar Shad said the funds should be allocated for rainwater harvesting in arid zones to reduce reliance on groundwater, adding the industries should be incentivize to adopt water recycling plants. LCCI President warned that without urgent action, Pakistan could face severe water shortages by 2030, crippling agriculture and industry. He said 'we need immediate investments in reservoirs, or our economy will suffer irreversible damage.' The LCCI office-bearers said the funds for health and education should be increased to ensure sustainable development. They said the government should formulate a clear solar policy with consistent subsidies, net-metering rules, and support for local manufacturing. The LCCI President urged the government to engage in immediate dialogue with stakeholders to address those concerns. He said the budget in its current form would risk stifling economic recovery. 'We hope the government will act on our recommendations before it's too late,' he added. He said that as the National Assembly prepares to debate the budget, policymakers must incorporate feedback from the business community to ensure a balanced and growth-oriented fiscal plan. Meanwhile, Sardar Usman Ghani, Central Chairman of Pakistan Hardware Merchants Association, while rejecting the decision to impose 18 percent tax on imported solar panels in the current budget, has warned that the move would cause irreparable damage to the process of generating cheap and clean electricity. He said it was incomprehensible that the Minister of Finance had given that explanation to protect the local solar panel manufacturing industry, firstly the solar panel industry was almost non-existent in Pakistan and secondly, that move would significantly increase the prices of solar panels. The protection to industry at the cost of public is not a step towards right direction. Public representatives in the government and opposition parties do not allow it to be approved in the budget. Copyright Business Recorder, 2025
Business Recorder
12-06-2025
- Business
- Business Recorder
Business bodies say budget lacks required incentives to revive struggling industries
LAHORE: Major business bodies have expressed significant reservations about the Federal Budget 2025-26, warning it lacks the strategic vision and incentives needed to revive Pakistan's struggling industries and attract vital investment. The Businessmen Panel (BMP) declared the budget risks pushing the economy further off the recovery path, citing a critical absence of measures to stimulate industrial activity, reduce crippling energy costs, or ease the cost of doing business. While the Pakistan Industrial and Traders Associations Front (PIAF) acknowledged some positive steps like tax simplification, it cautioned that overly optimistic revenue targets and the failure to address core issues like high electricity tariffs and interest rates overshadow these gains and hinder sustainable growth. The BMP of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has voiced serious reservations over the Federal Budget 2025-26, criticizing it for lacking any meaningful incentives to stimulate trade, investment, and industrial revival. BMP Chairman Mian Anjum Nisar has urged the government to immediately rectify policy anomalies, cautioning that the budget, if left uncorrected, could push Pakistan further away from the path of economic recovery. The BMP chairman maintained that 'while the budget may satisfy certain technical benchmarks, it does not reflect the pressing needs of the productive sectors of the economy.' He observed that the private sector had hoped for a more balanced and growth-oriented fiscal plan—one that would offer clear direction for industrial revitalization and export development—but instead received a document heavily focused on revenue collection and administrative compliance. According to Anjum Nisar, the government has missed a crucial opportunity to send positive signals to investors and entrepreneurs. Despite challenging global conditions and domestic constraints, the budget does not contain a strategy to stimulate industrial activity, improve business competitiveness, or reduce the excessive cost burden on manufacturers and exporters. 'This is not the kind of budget that can revive economic momentum,' he said. He warned that enforcing compliance without parallel incentives will dampen entrepreneurial energy. The increase in utility tariffs, particularly for gas—an essential input for various industries—without any relief measures, will directly affect export-oriented sectors and small businesses already battling high operational costs. He questioned the rationale behind burdening industries with unaffordable energy while speaking of industrial growth. Anjum Nisar said the absence of targeted steps to boost local production capacity and attract investment shows a lack of clarity in the government's economic vision. He stressed that the government needs to look beyond revenue targets and short-term fiscal adjustments. 'What the economy demands today are bold and focused steps to ease doing business, reduce energy costs, improve infrastructure, and enhance export potential.' Highlighting the significance of industrial performance in determining national stability, the BMP leader stated that the government should have come up with a practical roadmap to strengthen domestic industries, support SMEs, and introduce tax simplifications to widen the base instead of squeezing the existing compliant segments. Unfortunately, the budget continues to rely on conventional tools without offering real innovation or long-term direction. He was also disappointed by the limited allocation for public infrastructure development, pointing out that the proposed development expenditures fall short of what is required to uplift logistics, water supply, power transmission, and road connectivity—critical elements that facilitate business and trade. He emphasized that any meaningful strategy for growth must go hand in hand with investment in infrastructure, especially in urban industrial hubs. The BMP chairman further criticized the absence of reforms to address credit access and financing issues faced by industries. High interest rates continue to choke expansion plans and discourage entrepreneurship. Without a clear pathway to affordable financing, real sector growth will remain constrained, he noted. He questioned the logic behind setting overly ambitious targets for revenue and growth in the absence of a concrete enabling framework. 'The ground reality doesn't match the projections presented in the budget. Unless core challenges are addressed, the macroeconomic indicators cannot show lasting improvement,' he stated. Anjum Nisar noted that 'Pakistan cannot continue to rely solely on remittances or external borrowing for economic survival. It must build an export-led model backed by value-added manufacturing, technology enhancement, and trade diversification. The budget, however, fails to initiate such transformation, lacking strategic sectoral planning or industrial deepening.' He emphasized that the economy is at a stage where growth must take precedence over compliance. The private sector requires reassurance through facilitation, not surveillance. Instead, the tone of the budget sends a message of rigidity and pressure rather than cooperation and partnership with the business community. Copyright Business Recorder, 2025
Business Recorder
03-06-2025
- 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
