Pakistan Peoples Party Parliamentarians (PPPP) senior leader Mirza Ikhtiar Baig described the federal budget for 2026-27 as a balanced fiscal plan during a National Assembly debate on Sunday. Baig supported the government’s focus on national defence while calling for significant reductions in the petroleum development levy and urgent reforms to lower business operating costs to improve export competitiveness.
Did You Know? The federal government currently collects Rs117 per litre in petroleum levies, which generates approximately Rs1.7 trillion in annual revenue for the state.
Prioritizing National Defence
According to Baig, the government’s foremost priority remains a strong national defence despite the country’s challenging economic conditions. He noted a recent consensus among the leadership of Sindh, Punjab, Balochistan, and Khyber Pakhtunkhwa to voluntarily contribute billions of rupees toward defence requirements and modern technology acquisition. Baig credited Prime Minister Shehbaz Sharif, President Asif Ali Zardari, and PPP Chairman Bilawal Bhutto Zardari for fostering this political cooperation, which he characterized as a significant development in the country’s political history.
Economic Relief and Business Challenges
Baig argued that the government possesses the fiscal space to provide relief to low-income earners, specifically those using motorcycles and rickshaws. He urged the administration to reduce the current petroleum development levy from Rs117 per litre to Rs50 per litre. Furthermore, Baig highlighted three major obstacles for the export sector identified during recent meetings between business representatives and government ministers:
- A heavy tax burden on businesses.
- Uncompetitive electricity tariffs ranging from 15 to 16 cents per unit.
- Commercial lending rates between 12 and 13 per cent, despite an 11.5 per cent policy rate.
Expert Insight: The call for a reduction in the petroleum levy highlights a classic fiscal policy tension: the government’s need to maintain high-revenue collection to offset deficits versus the immediate political and social necessity of lowering inflation for the most vulnerable citizens. If the government accepts these industrial reforms, it may face a difficult challenge in finding alternative revenue streams to maintain its current defence spending commitments.
What May Happen Next
The government is likely to weigh these recommendations against its fiscal targets. If officials act on the business community’s concerns, they may initiate a review of electricity tariffs and tax structures to encourage foreign direct investment. Additionally, any decision regarding the petroleum levy will likely serve as a litmus test for the government’s ability to balance its revenue generation goals with public demand for economic relief.
Frequently Asked Questions
What did Mirza Ikhtiar Baig propose regarding the petroleum levy?
He proposed reducing the levy from Rs117 per litre to Rs50 per litre to provide relief to low-income segments of the population.
What are the primary obstacles facing the export sector according to Baig?
The primary obstacles include a heavy tax burden, electricity tariffs of 15 to 16 cents per unit, and commercial lending rates of 12 to 13 per cent.
How are the provinces participating in national defence?
The governments and people of all four provinces—Sindh, Punjab, Balochistan, and Khyber Pakhtunkhwa—have agreed to contribute billions of rupees voluntarily for national defence needs and the acquisition of modern technology.
Do you believe the government can simultaneously lower business costs and maintain its current level of defence spending?
