Islamabad: Arif Habib, a leading Pakistani businessman remarks signal cautious optimism about the upcoming FY2025–26 federal budget, especially for industries and salaried individuals who have long pushed for tax relief in a high-inflation, low-growth environment.
He is of the view the not only super tax but also income tax on salaried class would be reduced in the upcoming budget. He was hoping that with IMF agreement, these tax cuts will help boost economy and reduce burden on salaried class.
Key Highlights:
Expected Super Tax Reduction
- Super tax, a controversial levy on high-income earners and corporations, may be reduced in the upcoming budget.
- This aligns with recent private sector lobbying and could bolster corporate earnings, investor sentiment, and stock market performance.
Fiscal Policy Outlook
- According to Habib, PM Shehbaz Sharif has hinted at broader tax relief, suggesting a more growth-oriented budget.
- A super tax cut would benefit large listed companies, particularly in banking, energy, and industrial sectors — potentially encouraging reinvestment and expansion.
Stock Market Rally
- The PSX surged nearly 10,000 points, buoyed by:
- IMF programme approval,
- Policy rate cut by the central bank,
- India-Pakistan ceasefire announcement.
- This reflects renewed investor confidence and could help attract foreign portfolio investment.
Read More: Tax Officers to Be Deployed at Business Sites
Geopolitical Context
- The ceasefire agreement between India and Pakistan, confirmed by U.S. President Donald Trump, has helped ease tensions that were previously stoking regional instability.
- Arif Habib framed Pakistan’s diplomatic stance as mature and well-received globally.
Implications:
For Businesses: A super tax reduction will likely improve corporate profitability, potentially leading to increased investment and hiring.
For the Government: Balancing revenue needs (to meet IMF targets) with tax relief will be tricky. Any cut in super tax might be offset by broadening the tax base or removal of exemptions elsewhere.
Also Read: FBR extends income tax returns’ filing date
For Markets: A market-friendly budget with tax cuts and lower interest rates could maintain PSX’s positive momentum.
For Salaried Class: Anticipated relief may come via revised tax slabs or increased thresholds, offering some respite from inflationary pressures.
