Finance minister addresses post-budget press conference

Lead

Finance Minister Muhammad Aurangzeb has detailed the government's proposed budget for fiscal year 2026-27 in a series of press conferences and interviews, outlining measures aimed at stimulating economic growth, reducing tax burdens, and expanding the tax net. The budget, presented to the National Assembly, includes the abolition of the super tax for businesses earning more than Rs500 million, an additional Rs70 billion subsidy for a refinancing scheme, and reductions in customs duties on agricultural equipment to zero.

Aurangzeb described the budget as a "positive and pro-growth" plan that sets the foundation for accelerating sustainable growth, and he defended the methodology behind key economic indicators amid questions raised in parliament.

Coverage Comparison

Dawn's reports cover multiple aspects of the budget rollout, including a press conference where Aurangzeb explained the rationale behind tax changes, a National Assembly address where he responded to senators' recommendations, and interviews on Geo News programs 'Aaj Shahzeb Khanzada Kay Saath' and 'Capital Talk'. The coverage consistently highlights the government's emphasis on export-led growth, tax relief for specific sectors, and efforts to widen the tax net. The tone in the articles is largely optimistic, with direct quotes from the finance minister conveying confidence in the budget's direction.

Key Claims

Tax Reforms and Relief

Aurangzeb announced the abolition of the super tax for businesses earning more than Rs500 million, calling it a "very meaningful direction of travel." He noted that upon the directives of Prime Minister Shehbaz Sharif, the abolition was extended to "all exporters." The minister also highlighted that the government did not introduce new taxes in the next fiscal year, focusing instead on "enforcement and compliance."

For traders, the government launched the Tax Asaan Scheme with a flat tax rate of 1 percent. Aurangzeb described this as a "paradigm shift," adding that "we have to start somewhere" in efforts to widen the tax net. Under the scheme, the discretionary powers of income tax officers would be limited, with a Central Processing Unit monitoring compliance.

Subsidies and Tariffs

An additional subsidy of Rs70 billion has been proposed in the budget to enhance an ongoing refinancing scheme, which Aurangzeb said would take it "to a different level." He also announced that customs duties and regulatory duties on agricultural equipment have been reduced to zero, as part of a five-year plan to lower costs on intermediate goods and raw materials.

Economic Indicators and Methodology

In response to questions raised in the National Assembly, Aurangzeb clarified that no changes have been made to the methodology used for reporting economic indicators. He stated that the GDP growth rate for FY26 is 3.7 percent, calculated on constant prices of the base year FY15-16. The finance minister also explained that per capita income is determined based on current prices and is calculated on the gross national income (GNI) and estimated population. He noted that the size of the economy (nominal GDP) rose from $408.2 billion in FY25 to $452.1 billion in FY26.

Aurangzeb said economic indicators for FY18 would also be presented to legislators who raised concerns, to show "consistency of measurement from administration to administration."

Growth and Inflation Projections

Aurangzeb projected that the economy would grow by 4 percent in FY2026-27, with average inflation expected to be recorded at 8.2 percent. He also mentioned that the US-Iran deal had led to a reduction in petroleum prices, with a Rs74 reduction in petrol price and a Rs67 cut in the diesel rate.

Tax Net Expansion

The finance minister reiterated the government's commitment to reducing the disproportionate tax burden on certain classes by widening the tax net. He said the government needs to adopt a twofold strategy: tax deepening and broadening. "By deepening, I mean that we need to fix leakages, fight corruption and tax evasion through compliance and enforcement," he said. He also mentioned plans to replace traditional workflows with AI-led mechanisms with "zero human intervention" to improve tax collection.

Perspectives

The government, through Finance Minister Aurangzeb, views the budget as a balanced plan that provides relief to exporters, manufacturers, the IT sector, construction, and the salaried class while ensuring fiscal discipline. He emphasized that the budget was "overall a positive and pro-growth budget" and that the direction of travel was identified for reducing tax burdens.

In the National Assembly, opposition lawmakers raised concerns about discrepancies in the budget document, leading to a privilege motion by Khawaja Sheraz Mehmood and Azimuddin Zahid. Questions were also raised about GDP growth and per capita income calculations. Aurangzeb responded by defending the consistency of the methodology and expressing gratitude to lawmakers for their participation in the budget debate, including Opposition Leader Mehmood Khan Achakzai and the heads of the standing committees on finance.