ISLAMABAD: Finance Minister Muhammad Aurangzeb, while acknowledging the “disproportionately high [tax] burden” on the country’s salaried class, hinted at rationalising the current tax slabs.
Speaking at an event titled, “Dialogue on the Economy”, organised by the Pakistan Business Council (PBC) on Tuesday, the finance minister said that the government is committed to staying firm with commitments – made in the International Monetary Fund (IMF) programme and few things might have to be phased in or phased out in the budget 2025-26.
The finance minister said that the government intends to simplify the tax filing process for the salaried class. He acknowledged the “disproportionately high burden” on the country’s salaried class, hinting at a review of the current tax slabs.
Salaried class: Govt explains how tax burden can be lessened
“This is my personal view, that indeed on the salaried class side, there is a disproportionately high burden. The reality is that we do need to think about the various tax slabs that we have. However, I cannot make any commitment about that,” he said. “We want to make life simpler for the salaried class in Pakistan,” he added.
“One thing we are working on is, because it keeps on coming back to the salaried class and we need to do [something] in terms of rationalisation.”
Talking about the IMF programme, Aurangzeb reiterated that the government is going to stay firm with those commitments. “We are in the Fund’s programme, and have made commitments, therefore, few things might have to be phased in or phased out,” he said.
“We are in a three-year Fund programme and know where we are, what we have committed [to], and we are going to stay firm with those commitments,” he added.
The finance minister said that the government has already started the budget process in the first week of January, which will allow time to have a detailed discussion.
Aurangzeb said consultations with business chambers are planned to start in February. “With detailed feedback expected by March-April and [we] can come back to you [the business community] with what we can do and what we cannot,” he added.
Replying to a question, the minister said that these budget proposals would be assimilated and would discuss which proposal can be accommodated in this budget and which can later be phased in. He said the government will also take a stance in some places and would create facilities, but the documentation of the economy is necessary because Rs9.7 trillion cash is in circulation as these are among the few things on which the government was not going to compromise. “We have to stay the course and it is not essential that all proposals would be accepted. It’s not only about the Fund but we need to think how to put country in a sustainable path of growth,” he added.
“We have gone for stabilisation, but there is no automatic switch from stabilisation to growth. And we need to be very clear that we fundamentally changed the DNA of the economy, that we do not get into trouble”, said the minister, adding that the “Fund’s programme is Pakistan’s programme,” whether it is taxation, energy, SOEs, privatisation or whether public finance, we need to do it for our own country. The Fund and other multilateral institutions are there to help support, assist, fund us as required, said the minister, adding that it is one part of it.
The other part of it is technical and strategic, moving the policy of the FBR and putting it under the Finance Ministry. So that they can focus on collections, he added.
Referring to the Monetary Policy Committee (MPC)’s decision on Monday, where the central bank decided to cut the policy rate by 100 basis points (bps), the minister said that the KIBOR rate has come down to around 11 percent, adding that the reduction in interest rates would improve business confidence.
Talking about the SBP’s projection of reaching a $13 billion foreign exchange reserve by the end of the current fiscal, Aurangzeb termed it as “a very important milestone.” “That will essentially take us to almost 3-months of import cover,” he said. “If all goes well, this is a critical trigger for the economy and the sovereign being re-rated to a single B category.” The finance minister noted that the country is moving in this direction on the back of “very strong remittance flows and IT services exports.”
Aurangzeb further said that the government remains committed to reducing its expenditure and is pursuing the rightsizing policy. The policy rate which has come down has already helped us in terms of giving fiscal space and if all goes well, it should allow us more fiscal space next year.
Talking about the rightsizing of the federal government, the minister said that a number of ministries have been merged or abolished, and they were monitoring that. We have announced that about 150,000 posts are going to be abolished, which are vacant. Roughly 30,000 plus has already been done. So we are not only monitoring it for the announcement, because I do think it is very, very critical as we go forward in terms of rightsizing, and then there are a number of things which are devolved subjects and therefore should go to the provinces.
Talking about SOEs and privatisation, the minister said that they had initial hitches but are committed and going back to take things to the private sector. Talking about PIA’s privatisation, the minister said that the process was relaunched and this time around with some of the fiscal things which have now been adjusted in conjunction with the IMF and also the routes coming back and hopeful to take it through the finishing line.
About wholesalers and retailers, the minister said in terms of tax collection, they were absolutely on track.
Talking about agriculture income tax, the minister said that Punjab and Khyber Pakhtunkhwa have cleared the bills and now working with the other two provinces closely and expecting to go in that direction as well.
He said the government was moving inthe right direction to strengthen remittance inflows and promote export-led growth. He said Foreign Direct Investment (FDI) was an important part of the country’s roadmap to go forward, adding that every FDI which comes in has to have the element of exportable surplus to move towards export-led economy.
Copyright Business Recorder, 2025
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