Tariff Reforms Key for Export Growth, Says Finance Minister Aurangzeb in Post-Budget 2025-26 Press Conference
ISLAMABAD: During the post-budget press briefing for fiscal year 2025-26, Finance Minister Muhammad Aurangzeb stressed that comprehensive tariff reforms are crucial for reshaping Pakistan into an export-oriented economy.
Media Protest Over Missing Technical Briefing
The briefing began amid a walkout by journalists, who expressed dissatisfaction over the Federal Board of Revenue (FBR)’s failure to provide the traditional technical session on the Finance Bill 2025-26. This session typically helps the media grasp key tax proposals.
Information Minister Attaullah Tarar acknowledged the legitimacy of their concerns and assured them the FBR would soon arrange the pending session. After his public apology and assurance, the journalists returned and the press conference resumed.
Landmark Tariff Revisions Introduced
Highlighting the reforms, Aurangzeb stated that Pakistan is undertaking structural tariff adjustments for the first time in three decades. Key highlights include:
- Out of 7,000 tariff lines, 4,000 had additional customs duties eliminated.
- Duties were reduced on 2,700 more tariff lines.
- Around 2,000 lines pertain to raw materials and inputs used by exporters.
- The average tariff will now drop to slightly above 4%, aligning Pakistan with global trade norms.
“This reform is vital for enhancing industrial competitiveness and aligning with international trade standards,” he said.
From Protectionism to Global Trade
The finance minister explained that the intent is not just to lower taxes but to restructure the entire economic model. Reducing import tariffs, he noted, would allow better resource allocation and drive efficiency across industries.
“If we want to break the cycle of recurring dollar shortages, we must pivot from import substitution to export promotion,” he added.
Support for Salaried Class and Mid-Sized Enterprises
Aurangzeb assured that:
- The government provided maximum feasible relief to salaried individuals within the limits of fiscal space.
- The super tax on medium-sized businesses will be phased out gradually, signaling a positive investment climate.
Boosting Real Estate and Agriculture
In the housing sector:
- Transaction-related taxes have been adjusted to reduce costs for property buyers.
- A new mortgage financing scheme is being developed in partnership with the State Bank to improve housing accessibility.
In agriculture:
- The government postponed tax increases on fertilizers and pesticides after talks with the IMF.
- Focus areas include better seeds, technology integration, and accessible loans for farmers.
- Emphasis will also remain on livestock and dairy, which contribute 60% to the agri GDP.
Revenue Gains and Tax Compliance
Aurangzeb revealed that stronger enforcement efforts resulted in over Rs 400 billion in additional revenue this year.
- The tax-to-GDP ratio is projected to reach 10.4% this year and rise to 10.9% in the next fiscal.
- New legislation will soon be presented to tighten tax compliance and broaden the tax base.
Inflation Control, Budget Discipline, and Growth
He noted:
- Inflation has declined to 4.7%, thanks to timely policy actions.
- Government spending grew by just 1.9%, despite an inflation rate of 7.5%—reflecting prudent fiscal management.
- The total size of the 2025-26 budget stands at Rs 17.573 trillion.
- The government maintained a primary budget surplus of 2.4% of GDP.
Opposition Disruption in Parliament
The budget proceedings in the National Assembly witnessed strong resistance from opposition parties, including PTI and the Sunni Ittehad Council, who claimed the budget was influenced by IMF dictates.
Protesting lawmakers tore budget documents and raised slogans, while Prime Minister Shehbaz Sharif calmly engaged with his parliamentary allies during the ruckus.
Conclusion: A Step Toward Sustainable Growth
Aurangzeb concluded that the 2025-26 budget marks a shift towards sustainable development, with its foundation built on tariff rationalization, investor-friendly taxation, and sector-focused support. The government’s broader aim is to steer Pakistan towards long-term economic stability and global competitiveness.
