KARACHI:

The Pakistan business community says the International Monetary Fund (IMF) programme is no excuse to squeeze businesses and the public through the budget, arguing that the success of the upcoming fiscal plan will depend on the government’s ability to raise revenue from under-taxed sectors rather than placing the bulk of the burden on the already documented business community.

“IMF programme is no excuse to squeeze businesses and the public through the budget,” said Pakistan Business Forum (PBF) Chief Organiser Ahmad Jawad, speaking to The Express Tribune. Pakistan’s economic growth has remained stuck at an average of around 3% over the past four years, underscoring the urgent need for policies that encourage investment, industrial production and job creation.

“The decision to enter the IMF programme was the government’s own choice. However, the IMF does not require governments to place an additional burden on the business community and the public every year. If the economy is to move forward, meaningful relief measures must be introduced,” Jawad said.

He argued that revenue mobilisation should not come at the expense of compliant taxpayers and formal-sector businesses, warning that additional taxation in the upcoming budget could further dampen economic activity.

“The need to seek external financial assistance from the IMF reflected underlying governance and fiscal weaknesses,” commented Growth Securities Head of Research Nasheed Malik. However, he acknowledged that IMF-supported programmes help enforce fiscal discipline and prevent excessive spending. The IMF is primarily concerned with recovering its money and ensuring programme targets are met. It does not focus on how policies affect citizens. That responsibility rests with the government, he said.

According to Jawad, Pakistan’s cost of doing business is currently around 34% higher than that of many regional competitors, reducing the competitiveness of local industries in international markets. He cautioned that imposing fresh taxes could slow investment and push the economy closer to stagnation at a time when growth remains fragile.

The PBF official pointed to a written submission by the Ministry of Commerce to the National Assembly Standing Committee on Commerce, which acknowledged several structural factors behind the country’s elevated business costs. These include an anti-export bias within the tax regime, limited access to financing, high energy tariffs that undermine industrial competitiveness, and inadequate trade facilitation measures that increase compliance requirements and transaction costs. He said the ministry’s assessment validated concerns repeatedly raised by the business community and highlighted the need for meaningful reforms in the upcoming budget to improve competitiveness, boost exports, attract investment and accelerate economic growth.

Dr Jazib Mumtaz, an expert in public finance and trade at IBA, said the economy had attained a degree of stability over the past four years, but the next challenge was generating sustainable growth.

“The government has an opportunity to accelerate economic activity by providing meaningful support to the industrial sector. Policy priorities should increasingly focus on growth and investment while preserving the gains made in stability,” he said.

Mumtaz argued that revenue generation should not rely solely on additional taxation of compliant sectors. Instead, he recommended broadening the tax base by bringing under-taxed and undocumented segments of the economy, including retail and wholesale trade, real estate and informal businesses, into the tax net.

Among its proposals for the June 10 budget, the PBF has called for the abolition of the petroleum levy and its replacement with an 18% general sales tax on petroleum products, arguing that such a move would create a more transparent taxation framework.

The forum also emphasised the importance of agriculture, particularly cotton, which Jawad described as Pakistan’s “white gold”. He called for targeted incentives and support measures to revive cotton production, strengthen the textile value chain and reduce reliance on imported cotton.

The PBF further urged the government to introduce concrete budgetary initiatives to develop the blue economy and modernise agriculture, arguing that both sectors possess substantial untapped potential to support exports and sustainable economic growth.

“The government must decide whether investment capital should flow towards industry and exports or continue to be diverted into real estate and speculative activities,” Jawad said. The business body also recommended introducing a simplified one-page tax return system in place of the current lengthy filing procedure. According to the forum, a simpler tax regime would encourage compliance and help broaden the tax base.

Addressing Prime Minister Shehbaz Sharif, Jawad said the business community still expected the government to provide a clear direction through policies that support growth, investment and economic stability.

“The upcoming budget should restore confidence by reducing business costs, encouraging productive investment and simplifying taxation,” he said.

To improve export competitiveness and stimulate industrial expansion, Mumtaz suggested restoring the final tax regime for exporters, gradually phasing out the super tax, ensuring timely sales tax refunds and lowering corporate income tax rates.