By Ayesha Saba

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called for a shift in fiscal policy from a revenue-focused taxation model to a growth-led framework in its budget proposals for FY2026-27, arguing that sustainable economic expansion should be the central objective of taxation policy.

According to the FPCCI budget proposals document available with Wealth Pakistan, the business body stated that Pakistan’s current taxation framework remains largely centered on short-term revenue collection targets rather than long-term economic expansion and competitiveness.

The chamber maintained that a revenue-oriented approach can discourage investment, distort market signals, and contribute to the continuation of informal economic activity.

According to the document, the organization believes that economic growth itself should become the basis for improving revenue collection rather than relying heavily on higher tax burdens and short-term fiscal measures.

FPCCI stated that its proposals are designed to increase productive capacity, strengthen industrial activity, and support export expansion by aligning tax policies with actual economic activity.

The organization noted that the recommendations emphasize rationalization of taxes, reduction of distortions, improvement in compliance systems, and support for business facilitation measures across different sectors.

The chamber stated that stronger economic activity can create broader tax opportunities over time by expanding the number of documented businesses and increasing participation in the formal economy.

According to the proposals, creating a more supportive business environment can also improve competitiveness and encourage greater value addition across sectors.

FPCCI highlighted the importance of simplifying tax procedures and reducing cascading tax burdens as part of a broader reform effort.

The organization maintained that excessive compliance requirements and multiple taxation mechanisms can create additional operational costs for businesses and affect their ability to expand and invest.

The document also emphasized the need to accelerate digitalization efforts aimed at incorporating informal economic activities into the documented sector

According to FPCCI, greater use of digital systems can strengthen transparency and improve tax administration while reducing procedural barriers for businesses.

The chamber further proposed adopting a district-level economic strategy focused on localized industrial clusters, value chains, and region-specific comparative advantages.

It stated that such an approach can help connect fiscal policy with local economic strengths and support development across different regions.

FPCCI maintained that broader economic growth can contribute to stronger industrialization, export expansion, and investment activity while creating a more resilient economic structure.

According to the document, the organization believes that taxation policies should increasingly function as tools for economic development rather than being used primarily for short-term revenue generation objectives.

Credit: INP-WealthPk