Taxation Must Serve a Purpose, Not Become Merely Extractive-Chairman Finance Committee Calls for Evidence-Based Fiscal Reforms
Syed Naveed Qamar observed that OMCs merely act as collection agents for government levies and therefore cannot be permitted to retain public funds.

Islamabad, 20 June 2026:  

The Standing Committee on Finance and Revenue, under the Chairmanship of Hon. Syed Naveed Qamar, MNA, continued its clause-by-clause consideration of the Finance Bill, 2026 during its meeting held at Parliament House, Islamabad.

The Committee undertook a comprehensive review of the remaining budgetary proposals and received detailed briefings from the Ministry of Commerce, the National Tariff Commission (NTC), the Federal Board of Revenue (FBR), the Petroleum Division, and the Islamabad Capital Territory (ICT) Administration on proposed reforms relating to the National Tariff Policy, ICT vehicle token tax, and amendments to the Petroleum Products (Petroleum Levy) Ordinance, 1961.

The Committee received a comprehensive briefing on the Year-II reforms under the National Tariff Policy (2025–2030), aimed at simplifying Pakistan's tariff structure, reducing the overall tariff burden, promoting industrial competitiveness, encouraging exports, and aligning the tariff regime with international best practices.

The proposed reforms include rationalization of Customs Duty, Additional Customs Duty, Regulatory Duty, and exemptions under the Fifth Schedule, with reductions proposed on thousands of tariff lines and the removal of redundant exemption entries. The Committee was informed that the reforms are expected to reduce the overall average tariff while carrying an estimated revenue impact of approximately Rs.143.4 billion.

During the deliberations, the Chairman observed that tariff liberalization should be implemented in a balanced and phased manner to safeguard domestic industry while improving competitiveness and promoting exports. He emphasized that lower tariffs must ultimately translate into reduced production costs, affordable consumer prices, and increased value addition rather than merely benefiting importers. Stressing the importance of transparency and evidence-based policymaking, the Chairman directed that all future fiscal proposals should be accompanied by comprehensive revenue impact assessments, noting that taxation must serve a clear economic purpose and should not become merely an extractive exercise.

Hon. Members expressed concerns regarding the possible impact of tariff reductions on domestic manufacturing, revenue collection, and employment, as well as the proposed relaxation of restrictions on used vehicle imports.

The Committee also strongly opposed tariff concessions on environmentally hazardous imports such as shredded tyres, observing that such measures contradict Pakistan's climate commitments and undermine domestic recycling efforts. The Committee recommended phased implementation of the tariff reforms, periodic impact assessments, regular progress reports by the NTC, and adequate safeguards for strategic industries to ensure that the reforms promote sustainable industrial growth while protecting national economic interests.

The Committee also examined the proposed revision of token tax for motor vehicles in the Islamabad Capital Territory. Members expressed concern that shifting from a fixed-rate system to an invoice value-based taxation model for private vehicles, particularly in the 1300cc to 1800cc category, could disproportionately burden middle-income taxpayers.

The Chairman emphasized that any revision in token tax should be transparent, equitable, and proportionate to vehicle value without placing unnecessary financial pressure on ordinary citizens. The Committee recommended that the proposed tax structure be implemented only after a comprehensive impact assessment and appropriate consultation to ensure consistency with provincial tax regimes while maintaining taxpayer affordability.

The Committee further scrutinized the proposed amendments to the Petroleum Products (Petroleum Levy) Ordinance, 1961, with particular focus on strengthening enforcement against defaulting Oil Marketing Companies (OMCs).
The Chairman observed that OMCs merely act as collection agents for government levies and therefore cannot be permitted to retain public funds. Expressing serious concern over delays in the recovery of petroleum levies, he directed the Government to introduce a strict inbuilt enforcement mechanism providing for suspension of product supplies to any defaulting OMC after thirty days of non-payment, while eliminating discretionary extensions or installment facilities that weaken compliance. The Committee also recommended linking petroleum levy compliance with regulatory enforcement to safeguard public revenue. The Chair directed the Petroleum Division to redraft the proposed legislative amendments to explicitly eliminate installment powers for defaulting OMCs and institute immediate supply suspensions.

The Committee decided to continue its consideration of the Finance Bill, 2026, at its next sitting scheduled to be held on Sunday, 21st June 2026, at 11:00 a.m.

The meeting was attended by Rana Iradat Sharif Khan, Mr. Ali Zahid, Syed Sami ul Hassan Gillani, Mr. Bilal Farooq Tarar, Mr. Muhammad Usman Awaisi, Ms. Zeb Jaffar, Dr. Nafisa Shah, Ms. Hina Rabbani Khar, Dr. Sharmila Faruqui, Dr. Mirza Ikhtiar Baig, Mr. Muhammad Javed Hanif Khan, Mr. Arshad Abdullah Vohra, and Ms. Shahida Begum, MNAs. The meeting was also attended by the Hon. Minister for Finance, the Minister of State for Finance, the Secretary Finance, the Secretary Aviation, the Director General (Tax Policy Office), Members of the Federal Board of Revenue, and senior officials from the Finance Division, the FBR, and other relevant Ministries and Divisions.