Fiscal space created for broad-based relief in budget 2026–27

June 17, 2026 (MLN): The government has created fiscal space through economic stability, tax reforms and effective enforcement, enabling it to provide substantial relief to salaried individuals, exporters, industry, housing, agriculture, information technology and youth in the Federal Budget 2026–27, Federal Minister for Information and Broadcasting Attaullah Tarar said on Wednesday.

He said the economy had been steered away from serious challenges, including the threat of default, high inflation, exchange rate instability and historically low foreign exchange reserves, and had now been placed on a path of stability under the leadership of Prime Minister Shehbaz Sharif.

The minister made these remarks during an online briefing, which was also attended by Minister of State for Finance Bilal Azhar Kayani.

He said FBR reforms, digitalisation, improvements in the tax system, enhanced recoveries from major sectors, incentives for housing and exports, youth loan and skills programmes, abolition of duties on agricultural machinery, and facilitation measures for the IT sector and freelancers had supported broad-based economic activity and public relief.

Tarar said some people were accustomed to criticism for the sake of criticism, adding that even opponents of the budget were appreciating it and describing it as a relief-oriented budget.

He said that in the past, Pakistan Tehreek-e-Insaf (PTI) leaders repeatedly warned of default, while foreign exchange reserves had fallen to very low levels, import requirements were difficult to meet, and the exchange rate was highly volatile.

He added that inflation had reached 38 percent, with projections of up to 50 percent, the policy rate had crossed 22 percent, and remittances had declined significantly.

He said that in such circumstances, some officials had even taken leave as no one was willing to take responsibility for stabilising the economy.

He added that the current leadership of the Pakistan Muslim League-Nawaz (PML-N) took charge of economic management under the vision of Muhammad Nawaz Sharif and Prime Minister Shehbaz Sharif.

He said that if matters with the International Monetary Fund (IMF) had not been settled in Paris, the country could have faced default. He added that the prime minister personally worked to secure successful IMF negotiations, leading to Pakistan entering the programme and achieving stability.

Tarar said the government had repeatedly stated that relief would be provided once fiscal space was created, adding that instead of waiting, efforts were made to generate that space through reforms.

He said the Federal Board of Revenue (FBR) was restructured through digitalisation, removal of recommendation-based practices, and introduction of a merit-based system across customs and income tax operations.

A faceless appraisal system was implemented at ports, removing direct interaction between importers, exporters and customs officials, and enabling faster processing through online systems.

He said major sectors such as sugar, beverages, cement and tobacco had been earning high profits while not contributing taxes proportionate to earnings.

He added that monitoring systems, including cameras, IT-based tracking, production monitoring and barcode and QR coding of sugar bags, had been introduced, resulting in an additional Rs 60 billion tax collection from the sugar sector alone.

He said Rs 200 billion in revenue leakage had been identified in the tobacco sector, while enforcement actions were taken against illegal trade in the beverages and cement sectors.

He added that nearly Rs 800 billion in additional revenue had been generated through enforcement measures within a year.

He said tribunals were established to resolve tax disputes, leading to recoveries worth hundreds of billions of rupees through removal of stay orders and clearance of pending cases.

He said these reforms created the fiscal space that enabled relief for the public, adding that tax evaders should not be allowed to shift burden onto compliant taxpayers.

Tarar said individuals earning up to Rs 50,000 per month would pay no tax, while those earning between Rs 50,000 and Rs 100,000 would pay one percent tax, with reductions introduced for other income groups as well.

He said relief measures were also introduced for the housing sector, including reduced taxes on the purchase and sale of five-marla and ten-marla houses and plots, along with Rs 90 billion allocated for the Apna Ghar Programme.

He said exporters had been provided relief through the abolition of advance tax and super tax, while the interest rate under the Export Refinance Scheme had been fixed at four percent to enhance competitiveness.

He said significant funds had been allocated under the Prime Minister’s Youth Programme, under which 550,000 young people would benefit from agricultural and business loans. He added that technical training, sports talent initiatives, Daanish Schools and Daanish University were also being expanded.

He said import duty on agricultural machinery had been abolished, while additional facilitation measures were introduced for the private sector. He added that no new taxes had been imposed on the IT sector or freelancers, and incentives for IT companies were maintained.

He said approximately 3.6 million retailers outside the tax net would be brought into the system through a fixed tax scheme, under which a minimum annual tax of Rs 25,000 would be applied along with issuance of FBR certificates.

He said consultations were ongoing with jewellers’ associations regarding their demands, and an appropriate policy would be formulated.

He said all duties on agricultural machinery imports had been removed, while youth and agricultural loan programmes and innovation schemes would continue with reduced financing costs.

He added that salaried individuals, exporters and industry had all benefited from the budget, and that various stakeholders, including former finance minister Miftah Ismail, had also acknowledged relief measures.

Tarar said the country was moving towards stability due to collective efforts, acknowledging contributions from the finance minister, relevant institutions, the Special Investment Facilitation Council and other stakeholders, under the leadership vision of Muhammad Nawaz Sharif.

Copyright Mettis Link News