ISLAMABAD: Finance Minister Muhammad Aurangzeb on Wednesday issued a stark warning: Pakistan could face an additional tax burden of Rs400–500 billion if Parliament fails to pass key enforcement measures outlined in the 2025–26 federal budget — already approved by the International Monetary Fund (IMF).
“I now request my colleagues in both houses of Parliament to get the enabling clauses for enforcement measures passed; otherwise, we would have to take Rs400–500bn additional tax measures,” Mr Aurangzeb said at a post-budget press conference. The soft-spoken minister hinted at possible resistance within the ruling coalition and pressure groups.
The enforcement measures, though unnamed, include expanded powers for the Federal Board of Revenue (FBR) to block high-value transactions by non-filers and seal unregistered business premises. Legal authority to enforce these measures is seen as essential. “Legal backing will be critical to institutionalise compliance and sustain revenue growth,” he emphasized.
Of the Rs700bn in additional revenue targeted for the next fiscal year, Rs389bn hinges on enforcement, and Rs312bn on new tax measures. “These numbers are locked with the IMF,” said Finance Secretary Imdadullah Bosal, who also noted the federal cabinet’s decision to raise government salaries by 10% — an increase with a fiscal impact of Rs28bn.
Mr Aurangzeb addressed revisions to the income tax slabs. The first slab — those earning Rs600,000 to Rs1.2 million annually — will now pay 2.5%, down from the originally proposed 5%.
Responding to skepticism over tax enforcement credibility, Mr Aurangzeb said: “We have demonstrated practically that we can deliver,” citing Rs400bn recoveries through enforcement this year. “We now have the trust and credibility.”
The presser was briefly disrupted by a journalist walkout after the cancellation of a technical briefing. Information Minister Attaullah Tarar had to intervene and convinced media representatives to return.
On controversial salary hikes — up to 550% for ministers, MPs, and parliamentary officeholders — Mr Aurangzeb said: “Had these been adjusted annually since 2016, there would have been no sudden jump.”
Meanwhile, Mr Bosal acknowledged delays in implementing a contributory pension scheme for armed forces personnel. “This is not an easy job,” he said, citing ongoing consultations with the Defence Ministry.
Both officials avoided questions on increased allocations for parliamentarians’ schemes — raised to Rs70bn — and declined to disclose armed forces’ salary increases or allowances.
Mr Aurangzeb insisted the minor relief provided to salaried individuals, corporates, and other sectors signals the government’s intent. “This is a signal to start moving in the right direction.”
He confirmed that provinces have been asked to nominate members for the upcoming National Finance Commission meeting in August and dismissed speculation that the Centre plans to unilaterally alter the population-based formula for resource distribution.
Addressing confusion around a Debt Servicing Surcharge (DSS) on electricity, Mr Aurangzeb denied any such announcement. However, his budget speech did mention amending the NEPRA Act to allow the federal government to raise DSS beyond the current 10% cap.
On minimum wage, he said, “The industry and private sector are not even paying the existing minimum wage,” explaining the government’s reluctance to increase it further.
Mr Aurangzeb also revealed Pakistan’s intention to issue Panda bonds later this year to access Chinese capital markets, with plans to re-enter U.S. and European markets in 2026, contingent on credit ratings.
Highlighting trade reforms, he said duties had been eliminated on 4,000 of 7,000 tariff lines and reduced on another 2,700. “This is the structural reform not taken in the past 30 years. It’s a huge step,” he said, noting the alignment of tariffs with global practices.
In a rare moment of gratitude, the finance minister praised Dawn Group for its climate change campaign:
“I am very thankful to Dawn Group for the initiative it has taken on climate change. Through Breathe Pakistan, you have taken it forward. This is an existential threat to Pakistan,” he said. “We are living climate change day in and day out. I want to sincerely thank your institution for leading the charge.”
Key Figures Quoted:
- Muhammad Aurangzeb, Finance Minister:
“We would have to take Rs400–500bn additional tax measures.”
“We now have the trust and credibility.”
“This is a signal… to start moving in the right direction.”
“Had these [salaries] been adjusted annually, there would have been no sudden jump.”
“Industry is not willing to pay even the existing minimum wage.”
- Imdadullah Bosal, Finance Secretary:
“These numbers are locked with the IMF.”
“The contributory pension scheme for military personnel is not an easy job.”
- Attaullah Tarar, Information Minister (indirectly referenced):
Rushed in to address journalist grievances over the cancelled technical briefing.
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Story by Khaleeq Kiani
