ISLAMABAD (PEN) : Finance Minister Muhammad Aurangzeb underscored the critical role of tariff reforms in Pakistan’s economic growth and export enhancement during a post-budget press conference on June 11, 2025. Addressing the Fiscal Year 2025-26 budget unveiled by Prime Minister Shehbaz Sharif’s government, Aurangzeb emphasized that tariff adjustments, which had been neglected for three decades, are essential to stimulate economic development.
Tariff Reforms and Economic Impact
“The tariff reforms have not been carried out for the last 30 years,” Aurangzeb said, highlighting that the budget reduces tariffs to zero on approximately 4,000 of the 7,000 tariff lines. He stressed that these reforms aim not only to boost exports but also to foster broader economic progress.
The Finance Minister also reiterated the government’s commitment to reducing overall federal expenditure by 7% while targeting a 4.2% GDP growth for the upcoming fiscal year. The budget projects a fiscal deficit of 3.9% of GDP and estimates inflation to remain at 7.5%.
Taxation and Relief Measures
Aurangzeb detailed new tax slabs designed to ease the burden on the salaried class, with the minimum tax rate lowered from 15% to 4% for individuals earning up to Rs2.2 million annually. Additionally, those earning between Rs600,000 and Rs1.2 million will see their tax rate reduced from 5% to 2.5%.
Strict actions against tax non-filers are also proposed, potentially excluding them from the formal financial system to broaden the tax net. “No organisation will be exempt from scrutiny in the future,” said FBR chief Langrial, emphasizing that non-profit entities must demonstrate they are not engaged in commercial activities to qualify for tax exemptions.
Salaries, Pensions, and Agricultural Support
On salaries and pensions, Aurangzeb advocated for linking increases to inflation benchmarks. “Whether it is the public or private sector, it must be aligned with some benchmark,” he said, adding that salary and pension hikes worldwide typically correspond with inflation rates.
The minister assured small farmers would receive easier loan terms and clarified that the agricultural sector would not face additional taxes in the new budget. However, he cautioned, “We can only provide relief in accordance with our financial capacity.” Collaboration with provinces is planned to formulate policies supporting agriculture and livestock development.
Fiscal Challenges and Government Spending
Acknowledging the budget starts with a deficit, Aurangzeb admitted, “In the past, our debts continued to increase.” He justified necessary increases in expenditures, stating, “We have to move forward according to our means,” and highlighted the government’s reliance on loans to fund its initiatives.
Regarding the recent salary hikes for National Assembly and Senate officials, the Finance Minister defended the move, noting, “Look at when the salaries of ministers, ministers of state, and parliamentarians were last increased. The last increase in the salaries of cabinet ministers was in 2016.”
