AS federal budget for the next fiscal year is yet to be approved, the government already introduced an unexpected Rs36 billion mini-budget.
These additional tax measures—announced just days before the budget’s passage are aimed at compensating for the fiscal shortfall caused by the decision to reduce the sales tax on solar panel imports from 18% to 10% and to fund a 10% salary increase for government employees.
While it is commendable that the government has shown some responsiveness to the need for clean energy, the means by which it plans to balance the books raise serious concerns. Among the most regressive of the new measures is the imposition of a federal excise duty of Rs10 on a one-day-old chicken. This seemingly minor amount is bound to cascade into much higher poultry prices, hitting ordinary consumers the hardest—especially those for whom chicken remains a relatively affordable source of protein. The mini-budget also introduces a series of new levies and hikes in tax rates on investment income. These include an increase in income tax from 25% to 29% on dividends received by companies from mutual funds that earn profit from debt instruments and a hike in the withholding tax on profits from investment in government securities from 15% to 20% for institutional investors.
While these steps may generate short-term revenue, they risk discouraging much-needed institutional investment in the economy and could create long-term disincentives in the capital markets. Instead of recurring tax hikes that affect common people and investment incentives, the real focus should be on widening the tax net and ensuring that sectors with high earning potential and individuals whose lifestyles do not match their declared incomes are brought under proper scrutiny. With the total new tax measures now reaching Rs462 billion, the cumulative pressure on households and businesses is mounting. The Federal Board of Revenue (FBR) has been tasked with achieving a daunting tax collection target of Rs14.13 trillion for the upcoming fiscal year. Meeting this goal will require more than just stopgap taxation; it demands systemic reform, digital transparency and political will to confront entrenched tax evasion. Our fiscal health cannot be restored through patchwork taxation—it requires genuine reform rooted in fairness, efficiency and foresight.
