The National Assembly Standing Committee on Finance and Revenue has expressed concerns over the newly proposed retailer tax scheme, observing that the scheme could create distortions within the tax system, discourage compliance under the normal tax regime, and potentially erode the existing tax base.
Meeting Highlights
A meeting of the Standing Committee on Finance and Revenue was held at the Parliament House under the chairmanship of Syed Naveed Qamar, MNA. A team of financial experts presented the “Post-Budget Analysis of the Federal Budget FY 2026–27” before the committee. The experts briefed the committee on macroeconomic assumptions, revenue measures, expenditure priorities, development allocations, tax reforms, and the overall fiscal outlook.
Concerns Over Revenue Targets
Syed Naveed Qamar observed that the federal budget FY2026–27 remains heavily focused on revenue generation and fiscal consolidation, while offering limited measures to stimulate economic growth, investment, and employment. The chairman expressed concern over the continued practice of setting ambitious revenue targets despite repeated shortfalls in tax collection. He further questioned the rationale behind imposing additional taxation on citizens while simultaneously maintaining large primary surpluses and compressing development expenditure under IMF Programme requirements.
Budget Framework and IMF Programme
During the briefing, the committee was informed that the budget has been formulated within the framework of Pakistan’s ongoing IMF Programme, with fiscal consolidation and achievement of primary surplus targets serving as the principal policy objectives. The government has projected GDP growth of 4 percent and inflation of 8.2 percent for FY2026–27, while total federal expenditure is estimated at approximately Rs18.7 trillion.
FBR Tax Collection Target
The committee was informed that the Federal Board of Revenue (FBR) has been assigned a tax collection target of approximately Rs15 trillion. Members noted that FBR has historically struggled to achieve its revenue targets and expressed reservations regarding the feasibility of the projected increase in tax collection. Concerns were also raised regarding the heavy reliance on enforcement measures rather than broadening the tax base through meaningful structural reforms.
Provincial Fiscal Surpluses and Expenditure Composition
The committee discussed the requirement for substantial provincial fiscal surpluses under the IMF Programme and questioned the policy rationale of collecting additional revenues from taxpayers while restricting public expenditure and development spending. Members observed that excessive emphasis on fiscal surpluses may undermine economic growth and limit the government’s ability to address pressing social and developmental needs. The committee also reviewed the composition of federal expenditure and noted that debt servicing continues to consume the largest share of current expenditure, exceeding Rs8 trillion. Members emphasized the need for a comprehensive debt management strategy aimed at reducing borrowing costs and creating greater fiscal space for development priorities.
Subsidies and Climate Allocations
During the discussion on subsidies, members highlighted persistent inefficiencies in the power and gas sectors, which continue to impose significant fiscal costs on the national budget. Concerns were also raised regarding the effectiveness and transparency of various subsidy programmes and sector-specific incentives. The committee expressed concern over climate-related allocations and noted that Pakistan remains among the countries most vulnerable to climate change despite apparent reductions in climate-focused development spending. Members emphasized the need for greater investment in climate resilience, renewable energy, and disaster preparedness initiatives.
Tax Policy Measures
The committee further reviewed tax policy measures announced in the budget, including relief for salaried taxpayers, reductions in selected customs duties, incentives for exporters, and reforms relating to the property sector. The committee also discussed issues relating to climate budget tagging, gender-responsive budgeting, worker welfare funds, non-tax revenues, and the utilization of levies and surcharges. The ministry of finance clarified certain methodological concerns regarding climate and gender expenditure reporting and undertook to provide additional details to the Committee.
Chairman’s Concluding Remarks
Concluding the discussion, the chairman observed that while the budget introduces a number of incremental adjustments, it does not sufficiently address Pakistan’s underlying structural economic challenges. He emphasized that sustainable economic growth requires comprehensive reforms aimed at broadening the tax base, improving expenditure efficiency, strengthening debt management, and promoting investment and productivity.
Meeting Attendance and Approval of Minutes
The committee also approved the minutes of its previous meeting held on 25th May, 2026. The meeting was attended by Ms Zeb Jaffar, Muhammad Usman Awaisi, Dr Nafissa Shah, Ms Hina Rabbani Khar, Ms Sharmila Faruqi, Ali Jan Mazari, Dr Mirza Ikhtiar Baig, Muhammad Javed Hanif Khan, Arshad Abdullah Vohra, and Ms Shahida Begum, MNAs. The meeting was also attended by the officers from the Ministry of Finance and Revenue, Dr Ali Salaman and his team of economic experts. Tribute was paid to Shahenshah-e-Ghazal Mehdi Hassan.
