Shehbaz Sharif Pushes for Lower Direct Taxes in Upcoming Pakistan Budget
Pakistan’s Prime Minister Sharif Pledges Tax Cuts to Spur Economic Growth
Islamabad, Pakistan – – Prime Minister Shehbaz Sharif on Wednesday announced plans to reduce direct taxes “across the board” in the upcoming federal budget, signaling a shift in economic policy aimed at facilitating business and attracting investment. The announcement came during the inaugural session of the Pakistan Governance Forum 2026 in Islamabad.
Sharif emphasized the need to prioritize economic growth, production, exports, and foreign direct investment (FDI) over increasing taxation. “I believe that in the upcoming budget – which will come a few months later – we must decrease direct taxes across the board so that businesspersons and investors are facilitated,” he stated. He affirmed that his team is united on the need for immediate tax reductions.
The Prime Minister also addressed the issue of indirect tax collection, accusing some businesses of retaining taxes collected from consumers instead of remitting them to the government. He described this practice as a “huge injustice to the nation,” comparing it to a “carrot and stick approach” that unfairly burdens the public. Sharif specifically named the sugar, cement, and tobacco sectors as examples of industries where this issue is prevalent.
He noted positive trends in tax recovery within those sectors, citing a Rs36 billion increase in the sugar industry and a Rs60 billion increase in the cement sector between 2024 and 2025. However, he acknowledged that this improvement exists alongside instances of non-compliance, creating an uneven playing field for businesses that adhere to tax regulations.
Sharif stressed the importance of a coordinated, “whole-of-government” approach, involving federal and provincial governments, the military leadership, and other stakeholders. He highlighted recent consultations with various business sectors to inform economic policy decisions, asserting that the government’s role is to facilitate business, not to run it.
“The government’s duty is to facilitate them, to provide them whatever the government can do to support their efforts in terms of productivity, more efficiency, research and development, exports, and so forth,” Sharif explained. He expressed confidence in Pakistan’s ability to regain its economic standing, stating, “There is no lack of anything; if anything is lacking, it is will.”
Sharif’s announcement comes as Pakistan continues to stabilize its macroeconomic situation following economic challenges in 2023. He pointed to recent positive developments, including a drop in inflation to below 7 percent and a reduction in the policy rate to 10.5 percent. He also cited a Rs9 per unit reduction in electricity tariffs and initiatives to combat power theft, estimated to cost the country around Rs200 billion annually, as evidence of progress.
The Prime Minister acknowledged the need for “hard work, day and night” and emphasized the urgency of action. “We do not have the luxury of time; we will have to act and act speedily if we want to regain our lost standing,” he said.
Planning Minister Ahsan Iqbal also addressed the forum. Attendees included Power Minister Awais Leghari, Petroleum Minister Ali Pervaiz Malik, IT Minister Shaza Fatima Khawaja, Information Minister Attaullah Tarar, Sindh Chief Minister Murad Ali Shah, and British High Commissioner Jane Marriot.