LCCI warns of revenue shortfall, urges policy reforms to avoid mini-budget

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has raised alarms over a potential revenue shortfall exceeding Rs1 trillion by the end of FY25, warning that such a deficit could force the government to introduce a mini-budget, further straining businesses and people.

LCCI President Mian Abuzar Shad, Senior Vice President Engineer Khalid Usman, and Vice President Shahid Nazir Chaudhry highlighted the Federal Board of Revenue’s (FBR) failure to meet collection targets. Shad noted that the FBR had fallen short by over Rs190 billion during the first four months of the fiscal year and missed October’s target by more than Rs100 billion.

“If this trajectory continues unchecked, the consequences will be dire,” Shad cautioned. “A revenue deficit of Rs1 trillion is not just a number; it represents a significant threat to fiscal stability.” Shad criticised the government’s focus on political matters, which he said has sidelined much-needed economic reforms, deepening the ongoing revenue crisis. “If corrective measures are not implemented promptly, Pakistan will face a financial crunch that could derail its economic recovery,” he warned.

The LCCI urged policymakers to prioritise addressing structural issues within the tax system rather than relying on short-term revenue-generating measures that place undue pressure on existing taxpayers. “The solution lies in broadening the tax base, not squeezing those already contributing,” Shad asserted.

Highlighting untapped potential in the country’s financial system, Shad pointed to over 100 million bank accounts as a vast resource that could significantly boost revenue if brought into the formal economy. He called for innovative, technology-driven approaches to integrate these accounts effectively.

The LCCI leadership also criticised recent stopgap measures, such as increased federal excise duties on sugary drinks and higher withholding taxes on imports and services. They labelled these steps as superficial fixes that fail to address underlying fiscal issues. “These temporary measures may plug gaps in the short term but are unsustainable, adding to the burden on consumers and businesses,” they noted.

Shad further warned against heavy taxation on imports and raw materials, arguing that it stifles industrial growth and undermines the competitiveness of local industries. “Excessive duties discourage investment, limit production, and ultimately hurt exports. This creates a vicious cycle that exacerbates the revenue shortfall instead of alleviating it,” he explained. The LCCI stressed the need for structural reforms and urged the government to engage with the business community to develop policies that promote growth and stability.

“We need a comprehensive, long-term strategy that fosters economic expansion,” Shad said. “The government must bring stakeholders to the table to devise pragmatic solutions for ensuring fiscal discipline and economic progress.”