The Pakistan Peoples Party (PPP) has endorsed an 18% increase in defence spending in the upcoming federal budget, citing rising tensions with India, while terming the proposed development funds as insufficient.
Sources revealed that during a budget briefing led by PPP Chairman Bilawal Bhutto Zardari, the party backed a Rs. 2.5 trillion hike in defence allocations. However, the PPP raised concerns over the Rs. 1 trillion earmarked for the Public Sector Development Programme (PSDP), calling it inadequate to meet national development needs.
The party also proposed that the size of the PSDP should at least match the current year’s actual expenditures, which are lower than Rs. 1 trillion. The upcoming federal budget is expected to be tabled in the National Assembly before Eid.
Sources further disclosed that the government is proposing a 7% increase in pensions and a 6% raise in salaries. The proposed salary adjustment is linked to the anticipated average inflation rate of 5% for the next fiscal year. PPP members also voiced concerns over the ambitious Rs. 14.3 trillion tax target, calling it unrealistic in light of economic stagnation and negative growth in the manufacturing sector.
The delegation urged the government to extend preferential treatment to sectors vital for economic recovery and protection, particularly agriculture. They also recommended avoiding measures that could negatively affect the farming community and called for tax relief for the salaried class.
In a potentially controversial move, sources within the Federal Board of Revenue (FBR) confirmed that the government is considering imposing income tax on monthly pensions exceeding Rs. 200,000. If implemented, this could impact retired judges, three-star generals, and top-grade civil servants (Grade 21–22). The government is reportedly also exploring raising the minimum taxable income threshold to Rs. 83,000 per month for low-income earners.
Additionally, a proposal is under discussion to reduce tax rates across all income slabs by 2.5%, which could lower the effective income tax burden by up to 3%—though this would require clearance from the International Monetary Fund (IMF) later this month.
Officials also indicated the introduction of a new 20% tax slab, though there are concerns the IMF may not support this move.
PML-N Senator Anusha Rehman weighed in, urging the government to offer genuine relief to the salaried class and shift the tax burden towards the trader community.
The federal budget is expected to be announced around June 9, with defence expenditure projected to reach Rs. 1.7 trillion.
