KARACHI: As the Government of Pakistan finalizes the federal budget proposals for the upcoming fiscal year, Mian Zahid Hussain, Chairman of the Budget Advisory Council of FPCCI and other prominent business groups, has called for a transformative shift in national economic policymaking. He emphasized that the nation's long-term sustainability hinges on adopting an economy-driven revenue model rather than persisting with a revenue-driven approach.

According to Pakistan Businessmen and Intellectuals Forum, Hussain elaborated on the macroeconomic scenario, noting that Pakistan's economy is at a pivotal point, with the nominal GDP nearing Rs 110 trillion to Rs 115 trillion ($411 billion). Initial projections for the next fiscal year indicate an economic growth target of 5.1 percent. However, challenges persist, as evidenced by the Federal Board of Revenue (FBR) encountering a shortfall of over Rs 680 billion this fiscal year, attributed to regional supply chain disruptions and import constraints. Hussain pointed out that the shortfall results from a heavy taxation approach on a limited base, which hinders broader economic growth.

Hussain explained that a revenue-driven policy seeks to close fiscal gaps through stringent enforcement and increased levies on current taxpayers. This creates adverse effects on industrial growth, domestic commerce, and encourages capital flight. He emphasized the unsustainable nature of burdening the formal sector, noting that revenue collection targets are consistently unmet, even as tax objectives rise to over Rs 15.5 trillion for the upcoming period.

Instead, Hussain proposed a transition to growth-led revenue generation by enhancing the competitiveness of export industries, lowering energy costs, broadening the tax base through digitization, and simplifying documentation. He argued that this strategy could expand the economy's size from $405 billion to $1 trillion, aligning with Prime Minister Mian Shehbaz Sharif's vision. This would also raise the tax-to-GDP ratio from the current 10.6% to a more sustainable level.

Hussain urged the government to prioritize pro-growth reforms in the forthcoming budget, asserting that the prosperity of Pakistan's critical SME sector and industries would naturally boost government revenues and address long-standing fiscal imbalances.