ISLAMABAD: Prime Minister Shehbaz Sharif on Wednesday stressed the need to reduce direct taxes in the forthcoming federal budget, acknowledging that sustainable economic growth cannot be achieved by increasing the tax burden.
“How long can we keep stretching this?” he said while addressing the inaugural session of the Pakistan Governance Forum 2026 in Islamabad. “Unless there is growth and unless production and exports increase, and unless you invest and attract foreign direct investment, how much more tax can you continue to impose?”
The premier said that in the upcoming budget, expected in the coming months, the government would cut direct taxes across the board to facilitate the business community and restore investor confidence. Entrepreneurs and investors, he added, must feel assured that their capital would not be eroded by excessive taxation.
He underlined the need to expand the tax net, noting that due to various initiatives the country’s tax-to-GDP ratio had reached 10.5%. He also highlighted the importance of boosting production, exports and foreign direct investment (FDI), along with reducing indirect taxes in the next fiscal plan.
Regretting that indirect taxes collected from consumers and end users were not being deposited with the government, he termed it a serious injustice to the nation. He called for a whole-of-government approach to address economic challenges and urged stakeholders to move forward collectively towards sustained growth.
Recalling the economic situation in June 2023, the prime minister said Pakistan had been on the verge of default but was stabilised within two years through coordinated efforts of the federal and provincial governments and the military leadership. Inflation, which had surged to around 35%, was brought down to under 7%, while the policy rate was reduced to 10.5%, he said, adding that exports must now be gradually increased to tap the country’s full potential.
He said certain reforms introduced by the government were home-grown and not driven by the IMF, stressing they were necessary to avoid a boom-and-bust cycle.
Highlighting developments in the power sector, he said electricity tariffs had been reduced by Rs9 per unit while solar investments were protected. However, he expressed concern over Rs200 billion in annual power theft, saying only a unified government approach could curb the losses.
The prime minister also defended the closure of Utility Stores and the Pakistan Works Department, calling them corruption-ridden entities whose shutdown saved billions of rupees.
Referring to the Ramazan Package, he said Rs38 billion was being distributed to deserving citizens through digital wallets in a dignified and transparent manner.
The ceremony was attended by chief ministers, federal and provincial ministers, experts, diplomats, investors, businessmen, traders and senior officials.
“Though the journey can be long, arduous and thorny, we have accepted the challenge. Pakistan will carve its due place soon,” he said, reiterating that the government’s role was to facilitate the private sector, exporters and investors rather than run businesses itself.
