The Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Businessmen Panel (BMP) has urged the government to revisit its revenue-generation strategy and adopt a more balanced fiscal framework that supports economic growth, industrial expansion and investment while ensuring macroeconomic stability. The panel expressed concern that the growing dependence on indirect taxation, particularly the petroleum levy, is increasing the cost of doing business, accelerating inflationary pressures and reducing the competitiveness of Pakistani industries.
FPCCI former president and BMP Chairman Mian Anjum Nisar said that Pakistan’s economy has undergone a prolonged stabilization phase over the last several years, but the expected benefits in terms of higher growth, stronger investment and improved industrial activity have yet to materialize. He noted that despite significant fiscal adjustments and strict monetary measures, economic growth has remained below potential, while investment levels continue to remain unsatisfactory.
He said that the country is currently pursuing tight fiscal and monetary policies simultaneously, which is placing excessive pressure on businesses, consumers and productive sectors of the economy. While fiscal authorities are striving to generate higher revenues through taxes and levies, the State Bank of Pakistan is maintaining a restrictive monetary policy to control inflation. The combination of these policies, he observed, has reduced economic activity and increased the cost of financing for businesses. Mian Anjum Nisar pointed out that one of the major concerns for the business community is the increasing reliance on petroleum levy as a major source of federal revenue. He said that although the levy initially served as a substitute for taxes on petroleum products, it has gradually evolved into a significant revenue-generating instrument that directly affects fuel prices and transportation costs throughout the economy.
He observed that fuel prices influence almost every sector, including manufacturing, agriculture, logistics, trade and services. Whenever petroleum prices rise due to higher levies, the impact is transmitted across the supply chain, increasing production costs and ultimately raising consumer prices. This process not only contributes to inflation but also reduces the competitiveness of local industries in domestic and international markets.
The BMP chairman said that businesses are already facing multiple challenges, including high energy tariffs, elevated borrowing costs, regulatory burdens and declining consumer demand. Additional costs arising from indirect taxation further weaken the ability of enterprises to invest, expand operations and create employment opportunities. Small and medium-sized enterprises, in particular, are finding it increasingly difficult to absorb rising operational expenses. Mian Anjum Nisar stated that inflation remains one of the most serious economic challenges confronting the country. He noted that inflationary pressures are not solely driven by market demand but are also being intensified by taxation measures that increase production and distribution costs. Under such circumstances, the burden on households grows significantly, reducing disposable incomes and weakening overall economic activity.
He said that higher inflation often prompts the central bank to maintain or increase policy rates to contain price pressures. However, elevated interest rates substantially increase the cost of borrowing for businesses, discouraging investment in productive sectors. As a result, industrial growth slows down, new projects are postponed and expansion plans are delayed, affecting economic performance and employment generation. According to Mian Anjum Nisar, the government should recognize the close relationship between fiscal and monetary policies. Both policy instruments should complement each other instead of working in opposite directions. If monetary policy remains tight to address inflationary concerns, fiscal policy should focus on reducing cost-push inflation rather than introducing additional measures that increase prices and operating costs. He emphasized that Pakistan’s tax structure remains heavily dependent on indirect taxes, which place a disproportionate burden on consumers regardless of their income levels. Such taxes affect lower and middle-income households more severely and contribute to rising living costs.