Budget 2026, Call for Tax Reforms | Newsletter - June 2026
Budget 2026-27 and Beyond
In June, Pakistan presented its Budget 2026. Prime Institute published various research and Prime Comments, organised events, a pre-budget press conference and roundtables, held consultation rounds with state departments, appeared on mainstream media, and wrote for print media to advocate for a market-based economy with broad-based tax collection. June was therefore a critical month for assessing whether this research had been translated into policy action. Somewhat surprisingly, the Federal Budget 2026-27 is in the right direction, but the measures taken are not enough to spur the required economic activity.
The following is a roundup of our activities, media features, and publications during June 2026.
Media & Publications
Prime Brief
GST Framework in Pakistan: Assessment of Third Schedule Option
Authored by Maryum Ayub
Pakistan’s GST framework has a structural flaw: a multi-stage tax system working in a primarily informal retail industry. The informal retail sector has consistently avoided compliance, resulting in revenue leakage, increased enforcement complexities, and creating market distortions that weaken fiscal performance. For undocumented businesses, Pakistan’s tax policy has relied on penalty instruments like further tax, additional tax, and withholding tax. This defies the enforcement-based documentation and focuses on the indirect incentives embedded within the tax system.
Authored by Dr. Mohammad Ahmed Zubair
The FY27 budget introduces two unprecedented measures: (1) Provincial Surpluses of Rs 1.794 trillion. The federal government’s fiscal deficit is projected at Rs 7.02 trillion, but the overall deficit is shown as Rs 5.23 trillion. The difference—Rs 1.794 trillion—is the provincial surplus that the federation has committed to the IMF. This surplus is not a provincial policy choice. It is a federal commitment, negotiated with the IMF and then imposed on provinces. In effect, provinces are being asked to compress their spending to help the federation meet its primary fiscal surplus target of 2% of GDP (or Rs2.83 trillion). (2). Provincial Grants to the Federation of nearly Rs 1 trillion. Provinces are now expected to transfer around Rs 1 trillion back to the federal government as grants. The funds are being provided under Article 164 to fulfill strategic national requirements rather than a constitutional amendment to the NFC Award itself. The provincial ADP cuts reflect a federal-provincial fiscal consolidation driven by defence spending needs and IMF programme conditionalities for FY 2026-27.
News Articles
A Holding Operation, Not a Growth Budget - Dr. Ali Salman
Debt servicing consumes 69% of revenue, while development spending stays compressed.
Pakistan’s fiscal federalism has been rewritten in plain sight - Dr. Mohammad Ahmed Zubair
The constitutional architecture, including Articles 160 to 161, the 18th Amendment, and the NFC Award, remains untouched on paper. But in practice, the budget marks a decisive break from the post-2010 federal compact.
Taxation for prosperity - Dr. Ikramul Haq
The current tax policy has only one apparent aim: meeting the revenue targets imposed by the International Monetary Fund, even at the cost of undermining productivity.
2026-27: Budget: Moving towards competitiveness - Dr. Manzoor Ahmad
The most consequential reform is the transformation of the tax administration to a technology-driven, data-led model.
Building internationally competitive auto industry - Mueen Batlay
A globally competitive industry cannot be developed behind walls, without assuming additional risk.
Press Mentions
Pakistan’s Bobi Deep-1 Discovery - The Daily CPEC
Selective Budget Relief Expectations as Rs. 15.3 tr Tax Targets Loom - Independent News Pakistan
Market Split on SBP Decision as Inflation Stays Elevated - Independent News Pakistan
Press Releases
Media Appearances
Dr. Ali Salman appeared on multiple news channels, including Ary News, Pakistan TV, 365 News, and Channel 5 News, to discuss the 2026 budget, taxes, and the implications for economic growth.
Dr. Manzoor Ahmad, Research Board Member of PRIME and Former Ambassador to the WTO, appeared on Express News to discuss duties and tariffs on imported raw materials, competition, and industrial progress in Pakistan.
Bilal Ijaz Gilani, Research Board Member of PRIME and Executive Director of Gallup Pakistan, appeared on multiple news shows to discuss the Economic Survey 2025-26 and the US-Iran war and its repercussions on Pakistan’s Economy.
Dr. Hassan Daud Butt, Research Board Member of PRIME and Former Project Director of CPEC, appeared on Pakistan TV to discuss the direction of Pakistan’s economy.
Events
Press Conference
Prime Institute and Tax Payers Alliance Pakistan (TPAP) organized a pre-budget 2026 press conference on 3rd June. Speakers included Anwar Kashif Mumtaz, National Convener, TPAP; Syed Ali Ehsan, Chief Development Officer, PRIME; and Maryam Ayub, Research Economist, PRIME.
Parliamentary Caucus
Dr. Ali Salman, CEO, PRIME, presented an overview of the budget 2026 and its allocation for SGDs to the Parliamentary Caucus.
PRIME Videos
At PRIME, we posted the recorded sessions of Pakistan’s First National Tax Payers Convention 2026 on our YouTube channel, along with a podcast and an explainer video.
Compliant Taxpayers Deserve Respect and Dignity in Policy-Making | Dr. Ali Salman
Pakistan Budget: Minister Bilal Azhar Kayani on FBR Reforms, Tax Relief & IMF Targets
No Politician, MNA, MPA, or Senator Ever Talks About Low Taxes - Dr Khalil Ahmed
Why Pakistan’s Tax Policy is Shutting Down Industries
Pakistan's Tax Crisis & Budget 2026-27 Demands
Why High Taxes are Killing Documented Businesses in Pakistan?
Why Pakistan Never Decolonized Its Tax System? Colonial Tax Structure
Why Pakistan Can't Fix Its Tax System Without Fixing Its Politics | PTI, PPP, JIP, AWP
Taxation vs Relief: Can the Economy Survive This Budget?
How Pakistan's Mobile Taxes Are Keeping Millions Offline | Taxing Connectivity Report Launch
Why Pakistan's Tax Disputes Take Years to Resolve | Tax Litigation Panel
Why Pakistan's Tax System Rewards Evasion | Senior Economists on the Tax Framework
Compliant Tax Payers Demand Recognition | 15-Point Charter of Demands
Pakistan's Budget 2026-27: Lower Taxes, New Taxes, and a Petroleum Levy Gamble - ft. Maryam Ayub
Pebble in the Pond: An Approach to Regional Development in Balochistan and Sindh, Dr. Kaiser Bengali
Pakistan's Smartphone Tax Is a Failed Policy | Dr. Manzoor Ahmad
The Tax Injustice Killing Pakistan's Middle Class | Nayatel CEO Speaks
Business Sectors Demand Accountability for Their Tax Spending | Delegates' Statements
Action Points for Tax Reforms in Pakistan | Dr. Ali Salman
For queries, collaborations, or feedback, feel free to contact us. We appreciate your continued support. - Team PRIME