The Pakistan Business Forum (PBF) has voiced significant concerns regarding the federal budget for the fiscal year 2026-27, asserting that it lacks the bold and transformative initiatives necessary to spur industrial growth, enhance exports, revitalize agriculture, and generate employment opportunities. PBF President Khawaja Mehboobur Rehman pointed out that the government's target to increase petroleum levy collection by 18% raises alarms about sustained inflationary pressures, rather than providing meaningful relief to consumers and businesses. Higher taxation on petroleum products is expected to keep transportation and production costs elevated across the economy.
Export Incentives and Industrial Energy Tariffs
The forum emphasized that the budget does not offer substantial incentives to boost exports and improve Pakistan's international competitiveness. At a time when export-led growth is crucial for economic stability, the absence of robust export-oriented measures represents a missed opportunity. PBF also highlighted the government's lack of attention to industrial energy tariffs. According to the forum, industries operating at nearly half of their production capacity cannot be revived without significant reductions in energy costs. "While the industry was expecting a more comprehensive package to restore competitiveness and attract investment, the relief measures announced remain limited," the PBF stated.
Positive Step: Reduction in Super Tax
However, the PBF welcomed the government's decision to reduce the super tax by 2% and completely abolish it for businesses with an annual turnover of up to Rs500 million. The forum described this measure as a positive and commendable step that will provide relief to a significant segment of the business community, including the real estate and construction sectors.
Concerns Over Undocumented Economy
The forum also expressed concern over the continued expansion of the undocumented economy. It noted that the size of the cash economy has reportedly increased from Rs9 trillion to Rs12 trillion within a year, describing this trend as a clear indication of policy shortcomings and the failure to adequately document economic activity.
Salt Manufacturers Association's Reservations
Separately, Ismail Suttar, founder chairman of the Salt Manufacturers Association of Pakistan, expressed serious reservations about the federal budget 2026-27. He argued that the government has failed to introduce measures capable of delivering meaningful growth in exports at a time when the country urgently needs foreign exchange earnings. Suttar said the budget lacked a coherent roadmap for expanding Pakistan's export base and addressing challenges confronting manufacturers. He noted that despite repeated assurances of support for the productive sectors, exporters have received little beyond marginal tax adjustments.
Final Tax Regime Not Restored
According to Suttar, one of the biggest disappointments was the government's decision not to restore the final tax regime for exporters. He said the export sector had sought a straightforward tax framework that would minimize compliance costs and reduce interaction with tax authorities. "Reducing the withholding tax rate while keeping exporters within the normal tax regime does not solve the problem," he observed. "Businesses need predictability and simplicity, not additional paperwork and procedural complications." Suttar warned that Pakistan's regional competitors were aggressively facilitating exporters through tax incentives, lower production costs, and simplified regulations, whereas the latest budget offered no comparable relief.
