KEY POINTS
- Pakistan plans reductions in direct taxes to encourage business growth
- Emphasises the importance of production, exports, and foreign direct investment (FDI)
- Highlights homegrown reforms and addresses gaps in indirect tax collection
- Urges collective action to stabilise the economy and support the private sector
ISLAMABAD: Pakistan will reduce corporate and personal direct taxes in the upcoming federal budget to facilitate business activity and attract foreign investment, Prime Minister Shehbaz Sharif said on Wednesday.
Addressing the inaugural session of the Pakistan Governance Forum 2026 in Islamabad, the Prime Minister stated that sustainable economic growth cannot be achieved by continuously raising the tax burden.
“How long can we keep stretching this?, Unless there is growth and unless production and exports increase, and unless you invest and attract foreign direct investment, how much more tax can you continue to impose?” The Prime Minister raised pertinent questions.
He emphasised that entrepreneurs and investors should be confident that their capital would not be eroded by excessive taxation. PM Shehbaz also underlined the need to expand production, exports, and FDI, alongside reducing indirect taxes.
Reflecting on past economic challenges, he recalled that in June 2023, Pakistan faced the risk of sovereign default.
Through the combined efforts of the federal and provincial governments and the military, the macroeconomic situation was stabilised.
Inflation, previously around 35 per cent, was reduced below 7 per cent, and the policy interest rate was set at 10.5 per cent.
He highlighted that several reforms introduced by the government were homegrown, undertaken to prevent economic instability without any involvement of the International Monetary Fund (IMF).
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On the energy front, the prime minister noted a Rs 9 reduction in per-unit electricity costs, protection of solar investments, and measures to curb Rs200 billion in power theft.
He also cited the closure of corruption-prone entities, including Utility Stores and the Pakistan Works Department, which saved billions of rupees.
The Ramazan Package, distributing Rs38 billion to eligible citizens through digital wallets, was praised for its transparency and efficiency.
The ceremony was attended by chief ministers, federal and provincial ministers, experts, diplomats, investors, businessmen, and officials.
PM Shehbaz reiterated that the government’s role is to facilitate the private sector and investors, urging a collective action to sustain Pakistan’s economic growth.
