The government is weighing a downward revision of the Federal Board of Revenue’s (FBR) tax collection target for FY26, alongside the introduction of a flood levy to generate resources for rehabilitation and reconstruction.
According to official estimates, the FBR’s annual tax target of Rs14.13 trillion may be slashed by Rs300–500 billion, bringing it down to Rs13.7–13.9 trillion. The cut is being considered in light of anticipated economic losses caused by widespread flooding.
A new flood levy is also on the cards, expected to be imposed on high-net-worth individuals and sectors to finance recovery efforts. Preliminary damage assessments indicate that rice, sugarcane, and cotton crops have suffered losses of 15%, 5.7%, and 10% respectively, while livestock has also been affected. As a result, the government projects GDP growth to fall from 4.2% to around 3%, while inflation may climb to 8%.
Officials estimate revenue losses of up to Rs300 billion in the first half of the fiscal year, mainly due to reduced sales tax collection from the agriculture sector. Independent experts warn the shortfall could widen to Rs500 billion. However, authorities expect some recovery in the second half, particularly with better wheat yields.
Meanwhile, the government has missed the August 2025 deadline for the privatisation of Pakistan International Airlines (PIA) and other state-owned entities. Progress continues on the sale of distribution companies (Discos), banks, and power plants, with new timelines set for late 2025 and early 2026. Structural reforms in the power sector remain central to reducing circular debt and improving efficiency.
