Pakistan Budget 2025-2026: Tax Hikes Fuel Inflation Fears

Pakistan's 2025-2026 Budget: Tax Hikes Spark Inflation Concerns Pakistan's Finance Minister recently unveiled the country's budget for 2025-2026, sparking widespread concern over significant tax increases. The budget includes substantial hikes on various goods and services, potentially exacerbating existing inflationary pressures. The Finance Minister stated, "These measures are necessary to address the country's fiscal challenges." However, critics argue the increases will disproportionately affect low-income households. Among the most notable increases is an 18% tax on solar panels, a move that contradicts the government's stated commitment to renewable energy. Petroleum products also face steep increases, with a 2.5 rupee carbon levy on petrol, diesel, and furnace oil. Online transactions will also be subject to a 1% advance tax, up from 0.6%. The budget also introduces a 1% tax on the production and sale of electric vehicles, potentially hindering the adoption of sustainable transportation. "The tax increases are deeply concerning," said an economist from the Institute of Development Economics. "They could significantly dampen economic growth and further harm vulnerable populations." The government maintains that the tax revenue is crucial for addressing the country's fiscal deficit. The budget also includes provisions for increased penalties for non-filers, aiming to broaden the tax base. The long-term impact of these measures remains to be seen, but the immediate reaction suggests significant challenges lie ahead for Pakistan's economy.