Senate Pushes Tax Relief, Lower Power Bills in FY27 Budget

ISLAMABAD: The Senate on Thursday adopted 123 recommendations for the federal budget 2026-27, calling for wider tax relief, cheaper electricity, stronger social protection and higher levies on luxury assets before the final budget vote in the National Assembly.

The recommendations were moved by Senate Standing Committee on Finance and Revenue Chairman Saleem Mandviwalla after the committee completed its review of the budget proposals. The report will now be sent to the National Assembly, which has the constitutional authority to vote on the finance bill.

Among the most politically significant proposals is a call to raise the income tax exemption threshold for low-income earners and reduce tax pressure on salaried citizens hit by inflation. Senators also urged the government to avoid new taxes on basic necessities and lower the general sales tax burden on essential food items, medicines, education material and agricultural inputs.

The Senate also sought relief in electricity bills through targeted subsidies for low-consumption domestic users. It recommended withdrawing fixed charges, financing cost surcharge and GST on electricity bills for certain consumers, while asking the government to present a clearer roadmap for reducing circular debt and capacity payments.

Mandviwalla told the House that the country should avoid repeating past budget mistakes and adopt measures that can support economic stability. He also backed steps to promote solar energy and opposed taxes on card and ATM transactions, saying such measures create avoidable pressure on ordinary consumers.

The recommendations also focused heavily on agriculture, exports and public-sector employees. Senators proposed cutting taxes and duties on fertilisers, seeds, pesticides and agricultural machinery, restoring export-friendly tax measures, increasing salaries of federal employees by at least 15 percent and de-freezing medical allowance.

Finance Minister Muhammad Aurangzeb separately wrapped up the Senate debate, saying the government had held extensive consultations with senators, trade bodies and business representatives. He defended the broader reform direction, including digitisation of the Federal Board of Revenue and steps to bring small shopkeepers into the tax net through a simplified scheme.

The minister said Pakistan missed its economic growth target for FY26 because of global and regional conditions, but insisted that structural reforms were intended to help the country become more self-reliant. He also said no new taxes had been proposed for the IT sector and that measures were being taken to improve the environment for freelancers.

The Senate’s role in the budget process remains advisory, but its recommendations can influence political negotiations before final passage. The proposals reflect growing parliamentary pressure to shift the budget away from burdening existing taxpayers and toward broader documentation, luxury taxation and relief for vulnerable households.

The next stage will unfold in the National Assembly, where lawmakers will consider the Senate’s recommendations before the final vote. Whether the government accepts major relief proposals will determine how far the FY2026-27 budget changes before becoming law.