Pakistan’s ‘tax policy office’ is no longer under the Federal Board of Revenue (FBR) as Finance Minister Muhammad Aurangzeb announced on Monday that it was now under the purview of the Ministry of Finance. This means the FBR will no longer play the crucial role of preparing the annual budget.
“Tax policy office is now moved into the Finance Division. FBR has nothing to do with the policy. The next year’s budget to be presented in 2026 (for FY27) will be led by the finance and tax policy office and not by FBR,” Senator Aurangzeb said while speaking at a workshop titled ‘Unlocking Capital Market Potential for Banks’, organized by the Securities and Exchange Commission of Pakistan (SECP) and the Pakistan Banks Association (PBA).
Industrial policy
He also said the government is working consistently on an industrial policy to be announced soon, which will provide an enabling environment and accelerate industrialization in the country.
“Haroon Akhtar (Special Assistant to Prime Minister) is working day and night to get that (industrial policy) through the cabinet and make an announcement. This is an important element of how we are going to move from stability to sustainable growth, because these underline pillars are going to be quite critical,” he said, adding that over the past couple of months the government has already announced policies for tarrifs, electric vehicles, creating a cashless economy and the digital sector.
Tariff reforms
Giving a talk on tariff reforms for industries — particularly for export industries — Aurangzeb said the government has to reduce customs duties, additional customs duties and regulatory duties to a certain level over the next four to five years.
“This is essential to improve export competitiveness and also to take away the protection that we have provided certain industries for the longest time.”
In terms of the reforms, he said many institutions helped the government, including the World Bank.
“I just want to be very clear the IMF has nothing to do with it. Tariff reforms is very much a home-grown agenda of the government and this administration to make our industry more competitive as we go forward.”
He said finance and FBR believe reducing tariffs will hurt the collection of revenue.
“They say our revenue (collection) will fade away if we keep reducing duties.” However, “we have to get out of this short-term thinking and see what is the right thing to do for the country over the next four to five years if we are going to grow and move towards supporting competitiveness.”
Missing players
He noted that the corporate sector was largely missing from the workshop, even though they are key players in the development of the capital markets – as they are the one who mobilize funds (debt/equity) through the capital markets.
The minister suggested that the workshop organizers should form a capital market development council to mobile funds for developments through domestic capital markets like the Pakistan Stock Exchange (PSX).
The key stakeholders of the council could include the SECP, the State Bank of Pakistan, PBA, corporations, insurance and other instructions, and provincial representation – as a lot of execution power now lies with provinces.
American Dollar Exchange Rate