Karachi, April 20, 2025 – The Institute of Cost and Management Accountants of Pakistan (ICMAP) has proposed significant fiscal measures for the upcoming federal budget 2025-26, calling on the government to revise and expand the application of the Federal Excise Duty (FED) to untapped and undertaxed sectors of the economy.
In its formal budget proposals, ICMAP emphasized the urgent need to introduce FED on non-taxed areas such as property sales, sugar, acetate tow, and lubricants. The institute further recommended an upward revision in FED rates on cement and airline tickets, which it views as underutilized sources of revenue. ICMAP stated that aligning FED on locally produced cigarettes, e-cigarettes, and nicotine pouches with those on imported cigarettes will ensure fairness and reduce market imbalances.
According to ICMAP, these changes are not only aimed at increasing tax collection but also at reinforcing fiscal equity and promoting public welfare. “By widening the coverage of FED and increasing its rates, the government can achieve greater revenue diversity while aligning tax policy with socio-economic objectives,” an ICMAP spokesperson explained.
ICMAP stressed that harmonizing FED across similar product categories will help reduce tax evasion and enhance regulatory compliance. The institute is confident that a reformed FED framework could contribute significantly to Pakistan’s financial stability.
Estimated Fiscal Impact:
• The implementation of ICMAP’s recommendations is projected to raise the tax-to-GDP ratio to 12.3%, a substantial increase that could support vital development programs.
• The proposed FED enhancements are expected to generate an additional PKR 1.723 billion, contributing about 1.4% of GDP. This would not only reduce the government’s dependence on foreign borrowing but also boost fiscal resilience.
With Budget 2025-26 under preparation, ICMAP’s detailed suggestions offer a roadmap to revitalize domestic revenue streams through strategic changes in FED policy. The institute reiterated that a well-structured FED regime, if adopted, will lead to more sustainable growth and a balanced tax system. ICMAP believes the time is ripe to reform and expand FED to ensure equitable taxation and fiscal discipline across all economic sectors.