Pakistan’s textile industry has urged the government to introduce business-friendly measures in the upcoming Federal Budget 2026-27, warning that the country could miss a major opportunity to increase exports and attract international buyers if production costs remain high.

In a letter sent to Prime Minister Shehbaz Sharif, Fawad Anwar, Chairman of the Pakistan Textile Council (PTC), said global companies are increasingly looking for alternatives to their traditional suppliers. As international businesses diversify their supply chains, countries that can offer competitive prices, reliable production, and stable exports are likely to benefit.

According to the textile industry, Pakistan is well-positioned to take advantage of this opportunity. The country has a complete textile value chain, ranging from cotton production to finished garments, along with decades of experience in textile manufacturing and strong relationships with international brands and buyers.

However, the industry believes that several challenges are preventing Pakistan from fully benefiting from this global shift. High production costs, expensive energy, tax-related issues, and policy uncertainties continue to make Pakistani products less competitive compared to those from regional rivals.

Fawad Anwar noted that despite improving demand in international markets, Pakistan’s export performance has not improved as expected. During the first eleven months of fiscal year 2025-26, the country’s merchandise exports were approximately $1.66 billion lower than the same period of the previous year.

He said that many global buyers are actively searching for new sourcing destinations, and Pakistan is among the countries being considered. However, he warned that if production costs remain too high, international buyers may place their orders in competing countries instead.

According to the Pakistan Textile Council, economic stability alone is not enough to ensure long-term growth. While recent efforts to stabilize the economy have produced positive results, export growth remains essential for creating jobs, attracting investment, earning foreign exchange, and supporting overall economic development.

The council has called on the government to introduce several measures in the upcoming budget to support exporters and strengthen Pakistan’s competitiveness in global markets.

One of the key recommendations is the restoration of the Final Tax Regime (FTR), which exporters believe would simplify taxation and reduce compliance burdens. The industry also wants industrial electricity and gas tariffs to be reduced to levels comparable with those in competing countries.

Textile manufacturers argue that Pakistan currently has some of the highest industrial energy costs in the region. These higher costs increase production expenses and make it difficult for local exporters to compete with manufacturers in countries such as Bangladesh, Vietnam, and India.

The council has also urged the government to speed up the payment of pending tax refunds and withheld funds. According to industry representatives, large amounts of money remain stuck in delayed refunds, limiting cash flow and reducing the ability of businesses to invest in expansion, modernization, and job creation.

The textile and apparel sector remains Pakistan’s largest export industry and one of the country’s biggest sources of employment. Millions of Pakistanis depend directly or indirectly on the textile sector for their livelihoods, while textile exports contribute significantly to the country’s foreign exchange earnings.

The Pakistan Textile Council warned that if the government does not take timely action to improve competitiveness, other countries could secure new export orders that might otherwise come to Pakistan. This could result in lost business opportunities, slower industrial growth, and reduced export earnings.

Industry leaders believe that with the right policies, Pakistan can attract more international buyers, increase exports, create employment opportunities, and strengthen its position in the global textile market.

The council concluded by saying that it is ready to work closely with the government on reforms that can boost exports, support industrial growth, and contribute to long-term economic recovery. It stressed that the upcoming federal budget presents an important opportunity to help the textile sector become more competitive and capture a larger share of global trade.

Defence Minister Khawaja Muhammad Asif has suggested that reducing taxes on cigarettes could help the government fight illegal cigarette manufacturing and increase tax revenues.

In a message shared on X (formerly Twitter), Khawaja Asif said representatives of the legal tobacco industry had approached him and argued that current cigarette taxes are too high. According to them, lower tax rates would encourage more manufacturers and sellers to operate legally and pay their taxes instead of avoiding them.

The minister said he generally agrees with the view that very high taxes can sometimes encourage illegal business activities. When taxes become too expensive, some manufacturers may choose to avoid paying them by operating illegally or selling smuggled products.

According to Khawaja Asif, despite government efforts and crackdowns on illegal cigarette factories in recent years, unauthorized production continues to grow in different parts of the country.

He claimed that some illegal manufacturers have even moved their operations to unusual locations, including poultry farms and other hidden places, to avoid detection by authorities.

The defence minister said the illegal cigarette trade is causing huge losses to the national economy. He estimated that the government is losing around Rs. 300 billion every year in unpaid taxes due to illegal manufacturing, smuggling, and tax evasion in the tobacco sector.

Khawaja Asif argued that reducing cigarette taxes could make legal cigarette production more competitive. If legal manufacturers face lower tax burdens, the price difference between legal and illegal cigarettes could decrease, making it less attractive for consumers to buy untaxed products.

He also suggested that lower taxes could reduce opportunities for corruption and illegal earnings by dishonest officials involved in the sector.

In addition to discussing cigarette taxes, the minister criticized weaknesses in Pakistan’s tax collection and enforcement system. He said that improving tax administration and ensuring better implementation of existing laws could significantly increase government revenues.

Supporters of lower tobacco taxes believe that reducing tax rates could encourage more businesses to operate legally, expand the documented economy, and increase overall tax collection. However, others argue that higher tobacco taxes are important for discouraging smoking and protecting public health.

While Khawaja Asif has expressed support for reviewing cigarette tax rates, no final decision has been made. Any changes to tobacco taxation will be considered by the government during the preparation of the Federal Budget 2026-27.

The final decision on whether cigarette taxes will be reduced, increased, or kept unchanged will be announced as part of the upcoming federal budget.

Traders across Pakistan have welcomed the government’s newly introduced fixed tax scheme for small retailers, calling it a major step toward making the tax system simpler and more business-friendly.

Speaking on behalf of the trader community, Ajmal Baloch, President of the All Pakistan Anjuman-e-Tajran, praised the government’s efforts and said the new scheme is much easier than previous tax systems.

According to Ajmal Baloch, traders have been demanding a simple and understandable tax filing process for many years. He said that under the old system, tax forms were so complicated that even educated people often found them difficult to complete without professional help.

He appreciated the government’s economic team for designing a system that is simple and practical for small businesses. He also noted that the scheme has been prepared outside the traditional framework of the Federal Board of Revenue (FBR) and includes support in multiple languages, making it easier for traders from different regions to understand and use.

Under the new scheme, eligible traders will pay a fixed tax of 1 percent on their annual turnover. Baloch said that most traders are willing to pay taxes as long as the system remains transparent, fair, and easy to follow.

He explained that many traders previously faced difficulties due to frequent inspections and visits related to the Point of Sale (POS) system. According to him, these inspections often created unnecessary pressure and disrupted business activities.

Under the new arrangement, businesses that file their tax returns will receive a special board or certificate to display at their shops. Once registered under the scheme, traders will not face routine visits or inspections from FBR officials, which the business community sees as a major relief.

Ajmal Baloch also highlighted another important feature of the scheme. He said traders who pay at least Rs. 25,000 annually under the fixed tax system will be exempt from tax audits. This provision is expected to reduce concerns among small business owners about lengthy audit procedures.

However, he expressed concern that government officials or bureaucratic departments could make changes to the scheme in the future. He stressed that the business community wants the government to protect the scheme and ensure that its original structure remains intact.

He further explained that many traders already pay advance withholding taxes through their electricity bills. Under the new system, these payments will be adjusted against their final tax liability, ensuring that traders are not taxed twice on the same income.

While welcoming the initiative, Ajmal Baloch warned that traders could return to protests if significant changes are made to the scheme after its implementation. He urged the government to keep its commitments and prevent unnecessary interference by officials.

The trader leader also raised concerns about customs warehouse operations, alleging that there have been cases of losses and theft involving imported cotton consignments. He called on authorities to investigate such issues and improve oversight.

Finally, Ajmal Baloch urged Prime Minister Shehbaz Sharif to reduce excessive bureaucratic involvement in business matters and ensure that traders can operate without unnecessary hurdles. He said a simple tax system, combined with a supportive business environment, would encourage more traders to join the tax net and contribute to national revenues.

The trader community believes that if implemented properly, the new fixed tax scheme could improve tax compliance, reduce disputes between businesses and tax authorities, and help create a more cooperative relationship between the government and the business sector.

Pakistan’s leading business organization, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has urged the federal government to shift its focus from economic stabilization to economic growth in the upcoming Budget 2026-27.

The business community believes that while economic stability is important, Pakistan now needs policies that encourage investment, industrial expansion, exports, and job creation. According to FPCCI, sustainable economic growth is the only way to solve many of the country’s long-term economic problems and improve living standards.

Speaking on behalf of businesses and industries across Pakistan, Atif Ikram Sheikh, President of FPCCI, said that the organization’s Shadow Budget contains recommendations gathered from businesses, industrialists, traders, and exporters from across the country.

He called on the government to include these proposals in the federal budget and adopt a growth-oriented economic strategy rather than focusing mainly on increasing tax collection.

According to Atif Ikram Sheikh, many industries are currently struggling due to high electricity and gas prices, expensive financing costs, and weak business activity. He said that industries cannot grow and exports cannot increase unless businesses are provided with a more competitive and supportive environment.

The FPCCI president emphasized that Pakistan’s economy needs major structural reforms, especially in the tax system. He said the government should expand the tax base by using digital technologies, improving data sharing between institutions, and encouraging undocumented businesses and individuals to become part of the formal economy.

He argued that the current system places too much pressure on people and companies that already pay taxes, while millions of potential taxpayers remain outside the tax net.

According to FPCCI, the total tax burden on many industrialists can reach as high as 65 percent when all direct and indirect taxes are added together. The organization believes such high taxes make Pakistani industries less competitive compared to businesses in neighboring countries.

To support industrial growth and exports, FPCCI has proposed reducing the overall tax burden to between 35 and 40 percent in the upcoming budget. The business community believes lower taxes would encourage investment, help businesses expand operations, and improve Pakistan’s export performance in international markets.

Senior Vice President Saquib Fayyaz Magoon said the government should use modern data analytics and technology to identify wealthy non-filers and tax evaders instead of increasing pressure on existing taxpayers.

He also stressed the need to simplify tax procedures for small and medium-sized businesses. According to him, complicated regulations and excessive paperwork discourage businesses from entering the formal economy.

FPCCI further recommended that the government invest heavily in modern technologies to strengthen Pakistan’s economy. The organization highlighted sectors such as Artificial Intelligence (AI), digital services, and the nationwide rollout of 5G technology as key areas that could help local businesses compete globally.

Business leaders believe that investment in technology will improve productivity, attract foreign investment, and create new opportunities for young professionals and entrepreneurs.

FPCCI Vice President and Sindh Regional Chairman Abdul Mohamin Khan highlighted the financial difficulties faced by businesses, particularly in Sindh.

He said that high interest rates have made borrowing expensive, limiting business expansion and reducing investment activity. Many manufacturers are finding it difficult to increase production, purchase new machinery, or create additional jobs because financing costs remain high.

According to Abdul Mohamin Khan, reducing manufacturing costs and creating a business-friendly environment should be among the government’s top priorities in the upcoming budget. He believes such measures would encourage industrial growth, attract domestic and foreign investment, and generate employment opportunities across the country.

The FPCCI leadership concluded that its Shadow Budget offers a practical plan for economic recovery and long-term growth. The organization warned that if key recommendations from the business community are ignored, Pakistan could face continued economic stagnation, lower investment, and further closures of industrial units.

Business leaders say the upcoming Budget 2026-27 is an important opportunity for the government to support industries, boost exports, widen the tax base, and create conditions that encourage economic growth rather than simply focusing on revenue collection targets.

According to FPCCI, a growth-focused budget could help revive business confidence, strengthen the industrial sector, increase employment opportunities, and put Pakistan on a more sustainable path toward economic development.

Pakistan’s tax system is once again facing criticism for treating salaried employees and traders differently. While the government has recently announced a simplified tax scheme for shopkeepers and small traders, no major relief has been announced for salaried individuals.

Under the new scheme, retailers with annual sales of up to around Rs. 200 million can choose a simplified tax system. They will pay a fixed tax of about 1 percent on their annual sales and face easier filing requirements.

On the other hand, salaried employees continue to pay income tax under a progressive tax system. This means the tax rate increases as income rises, reaching up to 35 percent for higher earners. Some taxpayers may also have to pay additional surcharges.

One of the biggest differences between the two groups is how taxes are collected. Salaried workers have their taxes automatically deducted from their monthly salaries by employers before they receive their pay. This leaves little room for tax avoidance and ensures almost complete compliance.

In contrast, many small businesses and retailers operate largely through cash transactions. Because of this, some businesses can underreport their income or avoid paying the full amount of taxes they owe.

The contribution of salaried workers to government revenues has increased significantly in recent years. During the first nine months of the current fiscal year, the salaried class paid around Rs. 420 billion in taxes, making them one of the largest contributors to the national tax collection.

Many salaried employees believe the current system places a heavier burden on them than on other sectors of the economy. Besides income tax, they also pay various withholding taxes on electricity bills, mobile phone usage, fuel purchases, banking transactions, and other daily expenses.

These additional taxes increase the financial pressure on middle-income households, especially during periods of high inflation when the cost of living continues to rise.

Critics argue that traders and retailers are often offered incentives such as simplified tax schemes, reduced compliance requirements, and protection from strict audits to encourage them to join the tax net. Meanwhile, salaried workers have limited options because taxes are deducted directly from their income every month.

The difference between the tax treatment of salaried employees and traders has sparked widespread debate on social media and among economic experts. Many people believe the upcoming federal budget should provide meaningful tax relief for salaried workers who consistently pay taxes and contribute significantly to government revenues.

As the government prepares to announce the new budget, many salaried employees are hoping for lower tax rates, revised tax slabs, or other measures that could reduce their financial burden and improve fairness within the tax system.

Electricity consumers across Pakistan are expected to receive significant relief in their power bills over the next three months after the National Electric Power Regulatory Authority (NEPRA) approved a reduction in electricity tariffs.

According to the latest decision, NEPRA has approved a reduction of Rs. 1.99 per unit under the Quarterly Tariff Adjustment (QTA) for the January to March 2026 period. This reduction will remain in effect for June, July, and August and is expected to provide consumers with total savings of around Rs. 67 billion.

At the same time, NEPRA has also approved an increase of Rs. 1.19 per unit under the Fuel Cost Adjustment (FCA) for electricity used in April 2026. This increase will be included in June electricity bills and is expected to generate around Rs. 11 billion for power distribution companies.

Because both adjustments will apply at the same time in June, consumers will see a net reduction of about 80 paisa per unit in their June electricity bills. In July and August, the full benefit of the Rs. 1.99 per unit reduction will continue, providing even greater relief.

The fuel cost increase approved by NEPRA is lower than what was originally requested by the Central Power Purchasing Agency (CPPA). The CPPA had asked for an increase of Rs. 1.74 per unit, but NEPRA reduced the amount, lowering the expected recovery from around Rs. 16 billion to approximately Rs. 11 billion.

According to the regulator, the tariff reduction is the result of adjustments in several areas, including capacity charges, transmission costs, market operator fees, transmission and distribution losses, and the impact of government incentives aimed at encouraging higher electricity consumption in the industrial and agricultural sectors.

The relief will benefit most electricity consumers across the country. However, some categories, including lifeline consumers, certain prepaid electricity users, and consumers covered under specific government consumption packages, may not receive the full benefit of all adjustments.

The latest decision is expected to ease the financial burden on households and businesses at a time when many consumers are facing rising living costs. Lower electricity bills may also provide some support to industries and commercial users by reducing their operating expenses during the summer months.

Overall, the combined tariff adjustments are expected to provide electricity consumers with net relief of around Rs. 56 billion while helping maintain stability in the country’s power sector.

A major reform plan has been presented to Prime Minister Shehbaz Sharif with the goal of transforming Islamabad into a modern, smart, and digitally managed capital city over the next five years.

Under the proposal, Islamabad would get its own elected regional government to manage local affairs more effectively. A 27-member Islamabad Assembly would be created, and its members would be responsible for overseeing public services and local governance. The assembly would elect its own leader, who could serve as either a Chief Minister or Mayor, depending on the final structure approved by the government.

To support these changes, the government plans to introduce a new Islamabad Capital Territory Government Act. Existing laws related to municipal services and development would be merged into a single, unified system to improve coordination and reduce administrative complications.

The proposal also suggests transferring many powers currently held by federal institutions to the new local government. This would allow Islamabad’s elected representatives to make decisions on local matters more quickly and efficiently. However, important areas such as law and order, security, and city master planning would continue to remain under federal government control.

A special transition committee would be formed to oversee the transfer of responsibilities and ensure that the reforms are implemented smoothly over time.

One of the key goals of the plan is to turn Islamabad into a smart city through the use of modern technology and digital governance. To achieve this, six specialized agencies would be established to manage important sectors such as health, education, tourism, and digital services.

The reform blueprint also proposes creating a single digital platform that would bring together multiple government services in one place. This platform would include land records, tax services, licenses, permits, and public complaint systems. Citizens would be able to access these services online, making government processes faster, easier, and more transparent.

The plan further recommends giving Islamabad greater financial independence. An independent finance committee would be established to oversee local taxes, budgeting, and resource allocation. This would allow the city to generate and manage more of its own revenue instead of relying heavily on the federal government.

In addition, the proposed “Destination Islamabad” initiative aims to make the capital a more attractive place for tourists, businesses, and investors. Authorities hope that improved infrastructure, better public services, and advanced digital systems will help attract local and foreign investment while boosting tourism.

If implemented, the reforms could significantly change how Islamabad is governed, making it more autonomous, technology-driven, and efficient. The government believes these changes could help improve service delivery, increase transparency, encourage investment, and transform Islamabad into one of the region’s leading smart cities.