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Business Recorder
a day ago
- Business
- Business Recorder
FBR seeks 18pc tax-to-GDP ratio by 2027-28
ISLAMABAD: Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial Tuesday said that to achieve a national tax-to-GDP ratio of 18 percent by 2027–28, the provinces would be required to contribute three percent (currently 0.8 percent), amounting to Rs5.265 trillion annually (currently Rs961 billion), and the federation 15 percent (currently 11.3 percent, including the petroleum development levy (PDL)). In a recorded press conference, flanked by Minister of State for Finance Bilal Azhar Kayani, the FBR chairman warned that provisions in the law would be invoked to block avenues for tax fraud. On the criminal side, the scope of the law has been revised, and no criminal clauses will be used for tax recovery—only to prevent tax fraud. Langrial stated that tax collection through enforcement measures increased eightfold in 2024–25. The federal revenue (FBR + PDL) to GDP ratio is expected to reach 15 per cent by fiscal year 2027–28, while provinces will need to accelerate efforts to achieve three per cent during the same period. The federal revenue (FBR + PDL) to GDP ratio increased to 11.3 per cent in 2024–25, compared to 9.8 per cent in 2023–24, marking the highest growth. Improving tax-to-GDP ratio crucial to ease Pakistan debt burden: FBR official 'For the first time, all credible international institutions have recognised the FBR's efforts in additional revenue collection through improved compliance,' said the FBR chairman, adding that last year, the FBR's revenue-to-GDP ratio increased to 10.2 percent during fiscal year 2024–25—significantly higher than in the last 10 years. In June 2023–24, it was just 8.8 percent. He emphasised that the country needs to enhance the tax-to-GDP ratio to ensure sustainable economic growth. The increase in the tax-to-GDP ratio is due to three factors, including autonomous growth through inflation. Last year, Rs1.9 trillion was collected from inflation, while this year, ending in June 2025, Rs766 billion was received. In fiscal year 2023–24, new taxes and rates generated Rs107 billion, while this year, Rs805 billion was generated. The biggest shift came from enforcement and implementation this year, with a focus on compliance. Last year (2023–24), Rs105 billion came through compliance; this year, it was Rs865 billion—an eightfold increase in implementation for compliance rate improvement. 'In 2024–25, we are standing at a 12.1 per cent tax-to-GDP ratio, including 0.8 per cent from provincial contributions. The remaining 11.3 per cent comes from the federation, which includes one per cent PDL and 10.2 per cent from the FBR,' said the chairman, adding that provinces are collecting three taxes: property tax, agriculture income tax, and sales tax on services. Langrial said that taxpayers are the most important stakeholders in Pakistan's revenue system, and the government is committed to rebuilding trust between the tax machinery and the people. He emphasised that tax compliance must be based on facilitation, fairness, and transparency—not intimidation or coercion. 'Anyone who pays their taxes honestly is a crown jewel for the FBR and the nation. They are the reason this system functions,' he said, adding that the FBR has undergone substantial internal reforms over the past year aimed at changing institutional behaviour and making the organisation more service-oriented. He added that FBR offices would remain open to facilitate taxpayers. The chairman strongly rejected the use of pressure tactics in tax collection, making it clear that the FBR's mandate is not to extract more than what is legally due. 'Our officers are not expected to collect more money—they are expected to collect the right amount. That is the principle we are working with,' Langrial stressed. He further said that the FBR is working towards a culture of mutual respect and partnership with taxpayers, asserting that enforcement will be used judiciously and only when required to ensure compliance. Kayani said that the effective fiscal and monetary policies introduced by the incumbent coalition government had resulted in the positive performance of various economic indicators and put the economy on a sustainable growth path. The minister said the headline inflation dropped to 4.5 per cent from 28 per cent recorded when the current government took office in 2024. He said, the policies helped stabilise macroeconomic fundamentals without resorting to supplementary or mini-budgets, 'We outperformed our own expectations,' he said, adding that the policy rate was also reduced from 22 per cent to 11 per cent during the same period. The minister noted that a new three-year Extended Fund Facility (EFF) was successfully negotiated with the International Monetary Fund (IMF), which formed the foundation of the government's macroeconomic stabilisation strategy. Contrary to public skepticism, he said, the agreement was timely and comprehensive, and no additional fiscal tightening was needed beyond initial commitments. The government also posted a current account surplus of $1.8 billion, while foreign exchange reserves climbed to $14 billion by June 20, 2025—levels not seen in recent years. The minister acknowledged that declining reserves had historically been the country's biggest economic vulnerability and one of the primary reasons for repeated IMF engagements. However, he asserted that improved trade balances and reduced reliance on imports had helped reverse this trend. He said the FBR recorded an impressive 26 per cent growth in revenue collection during the fiscal year. Regarding the recently-passed federal budget, the minister credited both houses of Parliament for their constructive role and cross-party support during lengthy legislative processes. He said the budget was focused on consolidating macroeconomic stability while pivoting towards export-led and sustainable growth. The prime minister's vision, he added, is to build an economy that earns more foreign exchange, reduces external vulnerabilities, and creates inclusive prosperity. The government's new five-year export policy aims to remove additional customs duties and rationalise maximum import tariffs to 15 per cent, the minister explained. This, he said, would reduce the cost of machinery and raw materials for export-oriented industries, making them more competitive globally and encouraging industrial investment. The minister also highlighted targeted relief for salaried individuals, noting that income tax burdens had been reduced, resulting in higher take-home pay. He projected inflation for the upcoming fiscal year to remain between 6.5 per cent and 7.5 per cent, while salary increases would exceed that range, helping to protect real incomes. Copyright Business Recorder, 2025
Express Tribune
a day ago
- Business
- Express Tribune
SOEs' burden
Listen to article Pakistan's federal budget faces an existential threat, not from external shocks alone, but from the catastrophic financial hemorrhage of various state-owned enterprises (SOEs). These entities incurred losses of Rs851 billion during FY24, and total SOE losses now exceed Rs5.8 trillion, or about one-third of the recently passed Rs17.5 trillion federal budget. SOE bailouts cost taxpayers Rs1.58 trillion in FY24, more than the entire PSDP for FY26. The scale of the losses should generate outrage — about Rs1.9 billion a day is being squandered to keep the SOEs alive, and most of these SOEs do not even deliver services of acceptable quality. It is not that SOEs must make profits, as long as their service delivery is acceptable, because adding profit motives to their work can be disastrous in its own right — water companies in most countries are loss-makers but do provide clean water. In the 35 years since England privatised its water companies, the sector is in disarray as new owners did make them profitable by raising tariffs, but then tried to pocket all the revenue without reinvesting. Today, many companies are barely afloat, and UK consumers are paying billions of pounds more than they would have if the companies were not privatised. Thus, privatising Pakistan's water supply companies would not improve service quality — which is already atrocious — but would also raise consumer prices. However, the power sector has been successfully privatised in several countries, with the government's role limited to providing a quality regulatory regime. Here, despite billions in subsidies, power distributors are perhaps the biggest drain on the exchequer. Pakistan cannot thrive if the billions needed to improve health and education are instead being set on fire to keep SOEs afloat. The pace of privatisation needs to be accelerated — behind all the focus on PIA, several other parasitic state 'assets' need to go. Corporate governance and operational reforms that lead to their sale are the price Pakistan must pay for its economic survival.
Business Recorder
5 days ago
- Business
- Business Recorder
State-Owned Enterprises: CCoSOEs concerned over staggering losses
ISLAMABAD: The Cabinet Committee on State-Owned Enterprises (CCoSOEs) on Friday noted with concern the staggering cumulative losses of SOEs amounting to Rs5.8 trillion, with Rs342 billion incurred in just the last six months—equating to a daily loss of Rs1.9 billion. The committee chaired by Federal Minister for Finance and Revenue Muhammad Aurangzeb emphasised that issues such as inefficiencies in DISCO operations, slow network upgrades by NTDC, unfunded pension liabilities, and low governance standards continue to erode fiscal space and undermine investor confidence. The chair also stressed the importance of timely reforms, particularly in the power and energy sectors where circular debt has crossed Rs4.9 trillion, and reiterated the government's resolve to bring greater transparency, financial discipline, and accountability to the SOE landscape. SOEs' performance: PM directs ministries, divisions to implement monitoring system The committee heard a detailed briefing from the Central Monitoring Unit of the Finance Division on a biannual report on the Federal SOE Performance covering the period from July 2024 to December 2024. The report included a detailed overview of the state of affairs and key challenges confronting SOEs, including cumulative losses amounting to Rs5.8 trillion, with Rs342 billion incurred in just six months. The committee was told that the circular debt in the oil, gas, and power sectors had crossed Rs4.9 trillion, severely affecting cash flows and asset valuations. The government's fiscal support to SOEs—through grants, subsidies, loans, and other injections—had also exceeded Rs600 billion in six months, equivalent to nearly 10 percent of total revenue receipts. In addition, unfunded pension liabilities in DISCOs and other SOEs, estimated at Rs1.7 trillion, remain off the books, as do railways' pension obligations, the meeting was told. It was also highlighted that government guarantees currently stand at Rs2.2 trillion, while rollover costs and financial restructuring liabilities further compound fiscal pressures. Governance concerns persist, with low levels of transparency in beneficial interest disclosures under IFRS Section 30 and other compliance gaps. The lack of strategic alignment in business plans and operational inefficiencies across SOEs were identified as critical areas requiring urgent reform. The chair also emphasised the directors representing the government on the boards of state-owned enterprises must exercise due diligence and play an active role in safeguarding the financial health and operational performance of these entities through informed and responsible input. During the meeting, separate summaries submitted by the Power Division for appointment of Chairman on the Quetta Electric Supply Company (QESCO) Board; constitution of the Board of Directors of the Independent System Market Operator (ISMO); appointment of Independent Director/Chairman on the Board of Gujranwala Electric Supply Company (GEPCO) and Independent Director on GENCO Holding Company Limited (GHCL), submitted by the Power Division; and nomination of Independent Directors on the Board of Multan Electric Power Company (MEPCO), Power Information Technology Company (PITC), and constitution of the Board of Energy Infrastructure Development and Management Company (EIDMC), were also discussed and approved. Additionally, a summary moved by the Ministry of Railways for winding up of three railway companies—RAILCOP, PRACS, and PRFTC was also discussed and approved. The finance minister stressed the importance of aligning business plans with national priorities and addressing operational challenges in a timely and coordinated manner. Aurangzeb reaffirmed the government's commitment to strengthening the governance, operational efficiency, and financial sustainability of key public sector entities. Federal Minister for Power Sardar Awais Ahmed Khan Leghari, Minister for Maritime Affairs Muhammad Junaid Anwar Chaudhry, Minister for Science and Technology Khalid Hussain Magsi, and senior officials from relevant ministries and divisions attended the meeting. Copyright Business Recorder, 2025
Business Recorder
24-06-2025
- Business
- Business Recorder
FY26: Sindh CM lays govt's roadmap
KARACHI: Chief Minister Sindh Syed Murad Ali Shah, wrapping up the budget speeches during Monday's provincial assembly session, laid out the provincial government's roadmap for the upcoming financial year 2025-26, emphasising a vision rooted in development, fiscal responsibility and strategic investment. His remarks underscored the Sindh government's commitment to economic stability while setting ambitious goals for infrastructure, public services, and social welfare. Labelling the disruption by the opposition parties as blatant misconduct and a disregard for Assembly rules, Murad said: 'Despite having a clear majority in the House, we still strive for inclusive governance. But unfortunately, even basic parliamentary decorum was ignored.' The session began under the chairmanship of Speaker Awais Qadir Shah with prayers offered for the late mother of PPP MNA Ejaz Jakhrani. Addressing the House, the Chief Minister criticized the behaviour of opposition, asking, 'Is it ethical to stand before someone and chant 'thief, thief'? We formed an advisory committee to ensure the House proceedings remained orderly, but that was blatantly violated.' Highlighting the extent of budget engagement, Murad noted that he was the 135th member to speak in the debate, which lasted over 42 hours— an unprecedented occurrence in the Assembly's history. He compared this with last year, when 132 lawmakers participated in budget debate. CM Murad stated that Sindh's development budget constitutes approximately 30 percent of its total allocation, compared to Punjab's 23 percent and Khyber Pakhtunkhwa's 25.3 percent. While Balochistan's development share is higher, he said, it's (Balochistan) also governed by the PPP. He expressed frustration over reduced federal transfers. 'Initially, the federal government promised Rs1.9 trillion, but after the budget, it was revised to Rs1.796 trillion— a shortfall of Rs100 billion,' Murad said, adding that Sindh has formally requested the release of at least Rs237 billion. Despite federal shortfalls, the province's revenue collection has outpaced the centre's, with a 16% increase versus the federation's 13%. 'Sindh generates revenue for the entire country, and we collect tax accordingly,' Murad emphasised. He also supported PPP Chairman Bilawal Bhutto Zardari's remarks in the National Assembly on flawed agricultural income tax policies that forced wheat imports this year. He said Sindh plans to collect Rs8 billion in agricultural income tax next year—translating to Rs1,052 per acre. In comparison, Punjab, with 28.2 million acres under cultivation, has set a target of Rs10.5 billion. Outlining development plans, Murad said Sindh has launched youth development centers across districts, with 19 already operational. The province has also expanded services for persons with disabilities and autism centers. The Sindh Institute of Child Health and Neonatology (SICHN) is the world's largest child emergency network, and a new SIUT is being constructed in Larkana, he said. The budget includes plans to buy new ambulances, launch special projects for fishing community, increase funding for universities and the Sindh Solid Waste Management Board, and give government employees a 10–12 percent salary raise. The government has abolished entertainment and professional taxes and introduced tax relief on vehicles. Sindh's Annual Development Program (ADP) stands at Rs1,082 billion, he said. Rejecting criticism over lack of focus on Karachi, CM Murad said, 'Contrary to media reports, Rs12 billion worth of mega projects are reserved for Karachi this year.' He cited the flood rehabilitation project as a globally praised initiative with no contractors involved— homeowners are rebuilding their own houses. Out of 2 million targeted homes, 1.2 million are under construction, and 600,000 are completed. Addressing claims that 11 ministries are under his control, Murad clarified, 'I actually oversee 45 ministries in total but currently hold six portfolios.' He compared this with Punjab's CM, who holds 14 ministries, and CM Balochistan, who oversees 20. He also urged members to propose large-scale, visible development projects instead of small schemes. Sindh is the only province with strong financial discipline. He lauded Bilawal Bhutto Zardari's recent foreign visits, and praised Pakistan's armed forces for their strong response to Indian aggression. Earlier, Leader of the Opposition Ali Khurshidi launched a scathing critique of the PPP's 17-year rule in Sindh. He argued that the party's growing seat count was not due to performance. 'Public problems have only worsened during PPP's tenure,' he said. Khurshidi highlighted that numerous development schemes from 2017 remain incomplete, including cadet colleges in Sukkur, Khairpur, Kashmore, and Jacobabad. 'The education schemes of 2008 are still pending,' he added. He accused the government of ignoring Karachi's basic needs. 'Solid waste isn't collected even from doorsteps, and loopholes in governance bring disrepute to the state,' he said. He also raised alarm over Karachi's frequent earthquakes, questioning the government's inaction. Regarding federal treatment of Sindh, the opposition leader declared, 'The Centre is unjust to us, and we will not stay silent.' He corrected a claim by Minister Sardar Shah: 'Karachi doesn't just collect revenue—it generates it.' He reiterated support for the Karachi mayor but demanded urgent resolution of long running issues, including water crisis. Khurshidi concluded by calling out the presence of mafias in Karachi and urged resolution of the K-Electric issue. 'You insult us, yet expect our help too.' Sindh's Senior Minister for Transport & Mass Transit and Information, Sharjeel Inam Memon, highlighted key development initiatives during his budget speech, emphasising the launch of the 'I Work for Sindh' app, which has registered 7.2 million users, including over 127,000 job seekers—12,310 of whom have secured employment. The app integrates public and private job opportunities, gaining widespread popularity. He said in the transport sector, the Sindh government has expanded the People's Bus Service to five major cities and introduced the AFC system for fare payments. The Green Line service saw an increase of 15,000 daily riders after its handover to the provincial government, with integration plans under way with the Orange Line. Pakistan's first EV bus service and the region's first Pink Bus Service for women were launched, along with 1,000 pink EV scooters for women. A Pink EV Taxi service, with female drivers, is also being introduced. Copyright Business Recorder, 2025
Express Tribune
23-06-2025
- Business
- Express Tribune
CM terms opposition's uproar 'misconduct'
CM Murad Ali Shah speaks in the Sindh Assembly as the debate on the provincial budget concluded on Monday. Photo: Express Sindh Chief Minister Syed Murad Ali Shah, concluding the budget debate, termed the opposition's uproar during the Sindh Assembly session as misconduct. He said that assembly rules were not followed during the budget session, the opposition behaved inappropriately and tried to disrupt his budget speech. He said the Pakistan Peoples Party (PPP) holds a clear majority in the house and can pass the budget, but they still want to take everyone along. The CM claimed that Sindh government is providing services to the public in every sector. He said this time 135 members delivered speeches on the budget and more than 42 hours were allocated for debate, which reflects the democratic process. Comparing development budgets of other provinces, Murad said, Sindh's development budget is 30 per cent of the total, which is more than that of Punjab, Khyber Pakhtunkhwa, and Balochistan. He revealed that at the beginning of the year, the federal government had promised to give Sindh Rs1.9 trillion, but after budget, this amount was reduced to Rs1.796 trillion, which he termed unfair. He mentioned that Sindh collected taxes at a higher rate than federal government. Speaking on agriculture, the CM raised objections to federal policies regarding agricultural taxes, saying poor decisions led to the need to import wheat. He said that Sindh has set a target of Rs8 billion from agricultural income tax for the next fiscal year. He listed several initiatives related to education, health, disability support, autism centres, and youth development centres. He also mentioned projects such as the SICH Child Emergency Network, a new IUT in Larkana, new ambulances, and a fisheries support programme. Murad announced a 10 to 12 per cent increase in government employees' salaries and an eight per cent increase in pensions. He also declared the abolition of professional and entertainment taxes and tax relief on vehicles. Refuting media reports that Karachi is being ignored, he highlighted mega projects worth Rs12 billion for the city. In conclusion, the CM said if God and his party willed, he was ready to remain chief minister for 18 years. Opposition Leader Ali Khurshidi, during his budget speech, strongly criticised the PPP's 17-year rule. He said the increase in party seats was not due to performance but due to other factors, as public issues have worsened instead of being resolved. He called for the cancellation of failed and delayed projects, saying old schemes are a burden on the ADP. Khurshidi pointed out the lack of basic facilities in Karachi and poor solid waste management. He said Karachi generates revenue, but the city is not given its due share. He also criticised the federal government, stating Sindh's rightful share is being withheld. He further slammed the government over the water crisis, meager allowances for police personnel, and issues related to K-Electric. Khurshidi said the Karachi mayor has full support of the leadership, yet problems remain unresolved. The session was adjourned until 11am on Tuesday.
