Islamabad, December 16, 2024 – Finance Minister Muhammad Aurangzeb has commended the formal sector for shouldering the brunt of front-loaded tax measures introduced under the government’s economic stabilization program.
Speaking at a meeting with the Pakistan Business Council (PBC), Aurangzeb assured that the government would ease this burden as fiscal conditions improve.
During his visit to the PBC, Aurangzeb, accompanied by his advisor Khurram Shehzad, engaged in a detailed discussion on the economy. He highlighted significant progress in reducing the twin deficits and shared measures aimed at making the ongoing International Monetary Fund (IMF) program the last one Pakistan would require.
PBC Chairman Shabbir Diwan praised the strides made in economic stability over the past nine months. He emphasized the contributions of PBC members, who collectively pay a third of direct taxes, generate 40% of Pakistan’s exports, and create employment opportunities for millions in their value chains. Aurangzeb acknowledged these efforts, reiterating his appreciation for the formal sector’s sacrifices and its role in driving economic progress.
Aurangzeb lauded the quality of PBC’s research, particularly its objective advocacy on taxation and its “Make-in-Pakistan” initiative. He specifically praised a PBC report distinguishing between beneficial and harmful foreign direct investment (FDI). Members of the PBC offered valuable recommendations, including promoting exports of nontraditional goods and utilizing the country’s underutilized production capacity.
Discussions also touched upon Pakistan’s textile industry, with the PBC urging the government to negotiate lower tariffs on apparel exports to the United States, particularly those made from US cotton—a commodity for which Pakistan is now a leading importer. Aurangzeb acknowledged the need to review the Export Facilitation Scheme to allow domestic industries to supply exporters without incurring sales tax. Additionally, he agreed to examine reducing the 2% withholding tax on export receipts for low-margin items.
On import substitution, Aurangzeb highlighted progress made by the fast-moving consumer goods (FMCG) sector in indigenizing inputs. However, he cautioned against indefinite protectionism and advocated support for industries meeting export sales targets. Addressing taxation, the minister emphasized the need to level the playing field between the formal and informal sectors and sought the formal sector’s assistance in identifying tax evaders.
Aurangzeb further outlined ongoing reforms in the Federal Board of Revenue (FBR), including integrating advanced technology to broaden the tax base. Concluding the session, he requested PBC CEO Ehsan Malik to summarize the discussion and compile members’ proposals for further consideration.
This wide-ranging interaction underscores Aurangzeb’s commitment to fostering public-private collaboration in driving Pakistan’s economic recovery and growth.