In a major step towards structural reforms, the federal government has eliminated additional customs duties on 4,000 tariff lines out of a total 7,000, and also reduced duties on a further 2,700, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb announced on Wednesday.
\nSpeaking at a post \u2013budget press briefing, Aurangzeb described the tariff rationalisation as a \u201cmajor and important step\u201d in aligning Pakistan\u2019s trade and industrial policy with global standards. The initiative, he said, marks the beginning of a phased plan towards a simplified tariff regime, ultimately targeting an average tariff rate of just over 4 per cent.Drones
\n\u201cOverall, there are 7,000 tariff lines. Additional customs duty has been removed on 4,000 lines, and in 2,700 of those, the customs duty has also been reduced,\u201d the finance minister explained. \u201cOf these, around 2,000 tariff lines are directly linked to raw materials and intermediary goods used by the exporters.\u201d
\n\u201cThis is a structural reform that hasn\u2019t been undertaken in the past 30 years. This is a huge step, and we\u2019re committed to taking it forward gradually.\u201d
\nThe government\u2019s broader goal, according to Aurangzeb, is to reshape Pakistan\u2019s tariff architecture in a way that supports industrial growth and integrates the economy more deeply into global supply chains.
\nThe minister said, the tariff reforms were more than a fiscal measure, they mark a fundamental shift in Pakistan\u2019s economic model, aimed at dismantling the long-standing protectionist regime and laying the foundation for sustainable, export-led growth.
\nHighlighting the significance of the policy shift, Aurangzeb said the reduction and elimination of customs duties on thousands of tariff lines will enable more efficient allocation of both capital and human resources within the economy.
\n\u201cThis is not just about reducing duties\u2014it\u2019s about transforming the overall macroeconomic framework,\u201d the minister stated. When we bring down protection, we improve resource allocation, which is crucial for economic efficiency and competitiveness.
\nThe reforms are designed to gradually replace import substitution with export promotion, a pivot the government considers essential for addressing Pakistan\u2019s recurring balance of payments crises and dollar liquidity pressures.
\n\u201cIf we want to structurally reposition the country towards export-led growth, we need to change the very DNA of the economy,\u201d Aurangzeb said. \u201cThat\u2019s how we avoid falling into the same cycle of dollar shortages every time we try to grow.\u201d
\nThe minister touched on broader fiscal measures aimed at ensuring equity and sustainability, particularly for salaried individuals and mid-sized businesses. He noted that the government has offered as much relief as possible to the salaried class within the constraints of available fiscal space.
\n\u201cThis is the direction of travel, where do we want to take the salaried class?\u201d he said. \u201cDifferent slabs, including at the highest levels, have been carefully considered. From both my perspective and the Prime Minister\u2019s, we provided as much relief as the fiscal space allows.\u201d
\nHe also pointed to the phased reduction of the super tax on mid-sized corporations as part of the government\u2019s commitment to improving the business climate. \u201cEven if it\u2019s just a 0.5% reduction, it sends an important signal to the market,\u201d Aurangzeb added.
\nThe government, he said, announced a series of targeted reforms in the construction and agriculture sectors aimed at reducing transaction costs, supporting affordable housing, and ensuring credit access for small farmers.
\nAddressing recent concerns around construction-related taxes, the minister clarified that while overall tax liability has not been reduced, the government restructured the system to lower transaction costs, particularly for buyers.
\nIn a bid to promote homeownership, the government is also prioritizing access to mortgage financing. \u201cAs important as the fiscal side is, access to credit is equally important,\u201d the minister said. He informed that, in collaboration with the State Bank of Pakistan, the government is preparing to launch a new housing finance scheme to enable individuals to build homes through accessible credit.
\nOn the agriculture front, Aurangzeb described this sector as a crucial one for economic growth. He clarified that additional taxes on fertilizer and pesticide were to be implemented last June, however government negotiated with International Monetary Fund (IMF) and got it delayed till this year.<\/p>\n
The minister said, strengthened enforcement mechanisms have helped the federal government generate over Rs400 billion in additional revenues this fiscal year. He noted that while international stakeholders had previously doubted Pakistan\u2019s ability to implement tax laws effectively, the government has now demonstrated that meaningful enforcement is possible.
\nHe said, tax-to-GDP ratio was projected to reach 10.4% this year and to 10.9% in FY2025-26. As part of the broader reform agenda, the government is preparing to move forward with a legislative push, engaging both houses of Parliament to introduce amendments aimed at strengthening tax enforcement. Aurangzeb emphasized that legal backing will be critical to institutionalize compliance and sustaining revenue growth.
\nTo a question, the minister said, the increases in salaries and pensions were directly linked to the headline inflation, Consumer Price Index (CPI), ensuring adjustments reflect inflationary pressures.
\nHe reaffirmed the government\u2019s commitment to agriculture as the central engine of economic growth, with a particular focus on dairy and livestock, which account for 60% of the sector\u2019s GDP. \u201cAgriculture has been, and will remain, the backbone of our economy,\u201d he said, adding that greater federal policy coordination is needed on devolved subjects like seed technology, mechanization, and agri-financing.
\nOn the fiscal front, he reported a modest 1.9% rise in government expenditure, crediting prudent financial management. He said, despite inflation at 7.5%, the government managed to contain subsidies and reduce debt servicing, while selectively increasing spending where necessary for national priorities, Aurangzeb said.<\/p>\n","protected":false},"excerpt":{"rendered":"
In a major step towards structural reforms, the federal government has eliminated additional customs duties on 4,000 tariff lines out of a total 7,000, and also reduced duties on a further 2,700, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb announced on Wednesday. Speaking at a post \u2013budget press briefing, Aurangzeb described the tariff […]<\/p>\n","protected":false},"author":2,"featured_media":475190,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-483537","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-top-news"},"yoast_head":"\n