ISLAMABAD – Following the unveiling of the federal budget for 2025-26, Finance Minister Muhammad Aurangzeb addressed a press conference on Wednesday to elaborate on key economic strategies, particularly focusing on tariff reforms and tax enforcement. The session, however, began amid tension as journalists staged a walkout in protest over the government’s approach to transparency and engagement.

Journalists accused the government of withholding critical information about new tax measures, prompting a temporary disruption. Although the Finance Secretary attempted to pacify the situation, the minister proceeded with the briefing for the remaining attendees. The journalists later rejoined the session.

Tariff Cuts to Enhance Exports

Highlighting the central role of tariff reforms, Aurangzeb emphasized the government’s decision to eliminate additional customs duties on 4,000 out of 7,000 tariff lines. This move, he noted, is aimed at simplifying trade and boosting exports.

“This reform is a pivotal part of our economic revival strategy,” he said, indicating the shift toward a more open and competitive trade environment.

Limited Relief to Salaried Class Amid Fiscal Constraints

Addressing concerns over tax relief, especially for the salaried class, Aurangzeb acknowledged the government’s intention to ease their burden. However, he underlined the limitations imposed by current fiscal realities: “We wish to offer more, but our hands are tied by the available fiscal space.”

Tax Collection and Legislation on Enforcement

The minister disclosed that over Rs400 billion in taxes had been collected through enforcement alone this year. Stressing the importance of strengthening compliance, he said, “There are only two options: improve enforcement or introduce new taxes. We’re choosing enforcement and are seeking legislative support to do so.”

Aurangzeb reiterated plans to work with both houses of Parliament to introduce amendments that will close loopholes and bolster tax compliance mechanisms.

No Extra Burden on Agriculture Sector

On the agriculture front, the minister clarified that no additional taxes would be levied on the sector. Instead, small-scale farmers will be provided with soft loans to aid productivity.

The government’s approach to agriculture is part of a broader effort to raise the tax-to-GDP ratio, which currently stands at 10.3%. The target for the coming year is 10.9%, a goal he believes is achievable through better enforcement rather than new taxation.

Electricity Bill Surcharge Rumors Denied

FBR Chairman Rashid Mehmood Langrial addressed rumors regarding a proposed 10% surcharge on electricity bills, categorically denying the claim. “No such surcharge has been introduced,” he clarified.

On NFC Award and Provincial Coordination

In response to questions about changes in the National Finance Commission (NFC) award formula, Aurangzeb assured that any such discussions would involve full consultation with the provinces, particularly regarding the weight of population in revenue distribution.

Legislative Push for Sustainable Tax Collection

Aurangzeb noted that skepticism from international lenders last year led to the imposition of new taxes, as enforcement credibility was low. However, this year’s Rs400 billion collection from enforcement demonstrates progress.

“Out of the Rs2.2 trillion target, only Rs312 billion stem from new taxes,” he explained. “The rest is being driven by organic revenue growth and robust enforcement.”

Minimum Wage Unchanged, Salary Adjustments Defended

On the subject of wages, the finance minister confirmed that the minimum wage would remain at Rs37,000, adding that this must be considered in the context of prevailing inflation.

He also addressed criticism regarding recent salary hikes for senior officials, pointing out that cabinet ministers’ salaries had not been revised since 2016. “Had there been incremental increases annually, the latest adjustment wouldn’t appear so steep,” he said.

Summary:
The press conference painted a picture of a government focused on reforming its tax system through enforcement rather than introducing sweeping new taxes. While limited in offering relief due to fiscal constraints, the administration aims to stimulate growth through tariff adjustments and support for key sectors like agriculture. Despite political and media challenges, Finance Minister Aurangzeb reaffirmed his commitment to transparent governance and legislative backing for economic reform.