Nisar says govt depends on further hike in energy levies, already highest in region
ISLAMABAD, JUN 14 /DNA/ – The Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Businessmen Panel (BMP) has questioned the government’s ambitious budget revenue collection target, warning that its achievement may ultimately depend on further increases in petroleum and energy levies, which are already among the highest in the region and are contributing to inflation, higher transportation costs and rising business expenses.
FPCCI former president and Businessmen Panel (BMP) Chairman Mian Anjum Nisarexpressed serious reservations over the federal budget for FY2026-27, arguing that the government has set an overly ambitious revenue target without clearly outlining sustainable measures to achieve it. The panel fears that in the absence of meaningful tax reforms and broadening of the tax base, authorities may increasingly rely on petroleum and energy levies to bridge the revenue gap.
BMP Chairman Mian Anjum Nisar said the government had once again announced a challenging tax collection target despite repeated shortfalls in previous years. He questioned the practicality of achieving such a substantial increase in revenues at a time when economic growth remains fragile, industrial activity is struggling to regain momentum and private-sector investment continues to face multiple constraints.
He observed that while the budget contains several measures aimed at improving revenue collection, it does not adequately explain how the ambitious target will be achieved without imposing additional burdens on existing taxpayers and consumers. According to him, the business community remains concerned that indirect taxation and levies may once again become the preferred tools for generating additional revenues.
Mian Anjum Nisar said petroleum levies have increasingly become a major source of government revenue over the past few years. Given the scale of the new revenue target, he argued, businesses fear that further increases in fuel-related charges could be introduced during the fiscal year if revenue collection falls behind expectations.
According to him, petroleum levies in Pakistan are already at elevated levels compared with many countries in the region. Despite this, the budget framework appears to leave room for continued dependence on fuel and energy charges to support fiscal objectives. Such an approach, he warned, would have far-reaching consequences for the economy.
He explained that petroleum products serve as a critical input for transportation, logistics, agriculture and industrial production. Any increase in fuel costs directly affects freight charges, distribution expenses and operational costs across multiple sectors. As a result, businesses are often compelled to pass these additional costs on to consumers through higher prices.
The BMP chairman noted that rising transportation costs have a cascading effect throughout the economy. Increased freight charges raise the cost of moving raw materials to factories and finished products to markets, ultimately contributing to inflationary pressures. Essential commodities, food items and consumer goods become more expensive, reducing the purchasing power of households already struggling with high living costs.
Mian Anjum Nisar further warned that higher energy-related levies could significantly increase production costs for industry. Manufacturing sectors, particularly export-oriented industries, are already facing challenges due to elevated electricity tariffs, expensive financing and intense competition in international markets. Additional cost pressures could undermine their competitiveness and limit their ability to expand production and exports.
He said industries require a stable and predictable cost environment to make long-term investment decisions. Frequent increases in fuel and energy charges create uncertainty and discourage businesses from undertaking expansion projects, investing in new technologies or hiring additional workers.
The BMP chairman stressed that sustainable revenue growth cannot be achieved through repeated increases in indirect taxes and levies. Instead, he urged the government to focus on broadening the tax base by bringing untaxed and under-taxed sectors into the formal economy. He said meaningful documentation and structural reforms would generate more durable revenue streams while reducing the burden on compliant taxpayers.
According to Mian Anjum Nisar, the documented sector continues to shoulder a disproportionate share of the tax burden. Registered businesses and salaried individuals remain subject to extensive compliance requirements, while significant segments of the economy continue to operate outside the effective tax net. Addressing this imbalance, he said, should be a priority for policymakers.
He also called for measures aimed at stimulating economic growth, encouraging investment and supporting industrial development. A larger and more productive economy, he argued, would naturally generate higher revenues without requiring excessive reliance on indirect taxation.
The BMP maintained that fiscal discipline remains important, particularly in the context of Pakistan’s commitments under international financial programmes. However, revenue targets must be realistic and supported by policies that promote economic expansion rather than suppress productive activity through rising costs.
Mian Anjum Nisar urged policymakers to provide greater clarity regarding the strategy for achieving the budget’s revenue objectives. He said businesses need assurance that future revenue shortfalls will not be addressed through additional petroleum and energy levies that increase inflation and weaken industrial competitiveness.
The business community, he added, fully supports efforts to strengthen public finances and improve tax administration. However, it believes that long-term fiscal stability depends on expanding economic activity, increasing exports, attracting investment and creating employment opportunities rather than relying on short-term revenue measures that place additional pressure on consumers and productive sectors of the economy.
