Harsh Budget Measures
A prominent private sector advocacy group has issued a strong rebuke of the federal government’s recently proposed budget measures, warning that the draconian provisions contained in the Finance Bill 2025 could lead to business closures and mass protests if not urgently revised.
The Board of Governors of the Economic Policy and Business Development (EPBD), representing a wide spectrum of business leaders, has denounced what it describes as “anti-business and undemocratic” fiscal policies designed to expand the authority of the Federal Board of Revenue (FBR) far beyond reasonable tax enforcement.
In an official statement released on Friday, the EPBD highlighted grave concerns over multiple clauses in the Finance Bill that they argue would place the entire private sector under a regime of surveillance, intimidation, and legal overreach.
“These measures go against the very spirit of economic freedom and responsible governance,” the Board stated. “Instead of fostering investment and growth, the government is creating an environment of fear and uncertainty.”
Key provisions under fire include:
- Section 37AA, which empowers FBR officials to arrest individuals without a warrant, based solely on suspicion of tax fraud.
- Section 14AE, which allows for the arbitrary seizure of business premises and properties without sufficient legal safeguards.
- Section 37B, which permits the detention of businesspersons for up to 14 days, with possible extensions.
- Section 11E, enabling tax assessments and recoveries based purely on suspicion without the need for a thorough investigation.
- Sections 33 (13 & 13A), which propose 10-year prison terms and fines up to Rs10 million for vaguely defined offenses labeled as “tax fraud,” potentially criminalizing routine clerical or procedural errors.
- Section 32B, which grants quasi-judicial powers to private auditors, giving them unwarranted authority over business operations.
The EPBD insists these clauses represent not tax reform, but rather a dangerous expansion of state control that threatens economic stability. “This is not how modern economies are run. Surveillance, harassment, and arbitrary arrests have no place in a democracy,” the statement emphasized.
Alongside its legal objections, the EPBD is also pushing for significant macroeconomic policy changes. It proposes reducing the effective interest rate to 6%, arguing that lower rates would revive economic activity and allow the government to allocate more funds towards critical sectors such as education and health, potentially doubling last year’s spending.
According to EPBD estimates, the effective tax burden on businesses in Pakistan now ranges between 50% and 60%, including corporate tax (25%), dividend tax (25%), super tax, sales tax, import duties, and various withholding taxes. These rates are among the highest in the region and, in their view, make investment and job creation unfeasible.
The EPBD has called for an immediate rollback of excessive enforcement powers given to the FBR, the implementation of business-friendly reforms, and the introduction of a more balanced and predictable taxation system. Without these changes, the organization warned, many companies would have no option but to shut down operations.
“If the government believes it can collect taxes without taxpayers, let it try,” the Board declared. “And if the FBR thinks it can run the economy without businesses, it’s welcome to give it a shot.” This stark warning underscores the growing rift between the business community and the state, as tensions mount over the direction of Pakistan’s economic policy.
