KARACHI: Some businessmen have extended a cautious welcome while others have labelled it a “camouflage budget” due to its unrealistic targets and the lack of meaningful relief for both the business community and the general public.

Pakistan Business Council Chief Executive Ehsan Malik said that given the constraints of a fragile economy, the need to remain within the tramlines of the International Monetary Fund (IMF) programme, deliver fiscal balance, and avoid a repeat of the boom-and-bust cycle, it was unrealistic to expect significant relief from the budget.

“Yet, we should be grateful for small mercies. The salaried employees, especially those with lower pay, will benefit. Another major positive is the proposed restriction on non-filers from conducting high-value transactions or travelling abroad, he said.

Despite repeated statements on the importance of exports, there is no provision in the budget to offer immediate support. Exporters will continue to be subject to tax under the normal tax regime on profit or a minimum turnover tax, whichever is higher, he said.

Say no concrete plan to broaden tax base, boost exports and spur industrialisation

Malik said the clear winner from the budget is the real estate sector. The government was convinced by their case for reducing taxes to boost transaction activity. “I wish they did the same for businesses that pay much higher taxes. Also, Real Estate Investment Trusts, which is the formal part of real estate, did not benefit from the changes in the budget,” he added.

For a country with a very low savings rate, the removal of the Rs5 million bracket and increase in the withholding tax on profit from 15pc to 20pc is retrogressive, especially as some of the savers would be salaried employees, which the government wishes to assist.

Overseas Investors Chamber of Commerce and Industry (OICCI) Secretary General M. Abdul Aleem has expressed disappointment over the government’s limited progress in addressing inequitable corporate tax rates in the recent budget.

He reiterated the urgent need for a comprehensive overhaul of tax structures to enhance Pakistan’s competitiveness and attract foreign investment.

He also noted the absence of meaningful reductions in government expenditure, which could have helped narrow the budget deficit. Fiscal discipline remains critical to ensuring macroeconomic stability, and OICCI urges the government to prioritise expenditure rationalisation in its budgetary measures.

He regretted the government’s missed opportunity to broaden the tax base in the current budget. However, he said the OICCI welcomes several positive reforms, including simplified tax returns for salaried individuals and small businesses, the nationwide rollout of e-invoicing, and the expansion of POS systems, all measures long advocated by the Chamber.

Exports/industrialisation

Businessmen Group (BMG) Chairman Zubair Motiwala noted that while the budget includes various announcements related to digitalisation and promoting a cashless economy, these measures alone are insufficient to stimulate exports or drive industrialisation, which are critical for sustainable economic growth.

Addressing a press conference at the Karachi Chamber of Commerce and Industry (KCCI), Chairman BMG criticised the government for setting overly ambitious goals despite the country’s poor economic performance in the previous fiscal year, during which all major targets, including GDP growth and fiscal consolidation, were missed.

He questioned the rationale behind increasing the targets without providing any practical explanation of how these would be achieved, especially in a fragile economic environment dominated by uncertainty, high inflation, and IMF-imposed constraints.

Chairman BMG pointed out that the government’s approach to achieving the elevated tax collection target seems to rely largely on extracting more revenue from the existing pool of compliant taxpayers rather than expanding the tax base.

He feared that instead of introducing meaningful reforms to bring untaxed sectors into the fold, the budget would result in increased discretionary powers for tax officials, further burdening documented businesses and discouraging economic activity. He warned that this strategy of squeezing the formal sector could result in shrinking economic output rather than expanding it.

Chairman BMG lamented the lack of any significant policy direction aimed at boosting exports or industrialisation. He said the government appears to be moving towards an import-dependent model, ignoring the need to reduce the cost of doing business, especially in energy-intensive sectors like textiles. No announcement was made to address the high cost of gas, which continues to make Pakistani products uncompetitive in international markets. He emphasised that without reducing gas tariffs or easing the interest rate environment, the government’s growth targets will remain unattainable.

He added that the budget lacked any vision for structural reforms or the creation of a pro-business environment essential for economic revival.

Motiwalla criticised the negligible support provided to the export-oriented textile sector, which he noted is the backbone of the country’s economy. A meaningful reduction in gas prices, particularly for industrial users, could have yielded positive results but, unfortunately, it was not announced. In such circumstances, both local and foreign investors are unlikely to make any long-term commitments in Pakistan.

Published in Dawn, June 11th, 2025