The Economic Policy & Business Development (EPBDT) has proposed major structural reforms to reshape Pakistan’s economy and break its repeated boom-and-bust cycle. On Monday, the think tank outlined wide-ranging policy changes aimed at reducing taxes on businesses and salaried individuals. It also set an ambitious target of up to 8.5 percent GDP growth by FY31 through export-led expansion.
The think tank introduced Pakistan’s first “Shadow Policy Documents,” which include an alternative tax reform plan, a shadow federal budget, and a five-year development strategy. It also released a shadow economic survey presenting a parallel policy direction to the government’s current framework. EPBDT Chairman Dr Gohar Ejaz said Pakistan needs homegrown structural reforms to reduce reliance on IMF programmes and support long-term stability.
During the launch, Dr Ejaz was joined by EPBDT Patron-in-Chief Bashir Jan Muhammad, CEO Ahmad Nawaz Sukhera, and FPCCI Patron-in-Chief SM Tanveer. The group criticised the current tax system, calling it distorted, imbalanced, and harmful to formal businesses. It said the system places heavy pressure on productive sectors and slows economic growth.
EPBDT’s tax reform plan suggests reducing the corporate tax rate from 29 percent to 25 percent. It also proposes removing the super tax except for banks. In addition, it recommends ending withholding tax on inter-corporate dividends to improve business competitiveness.
For salaried individuals, the think tank proposed reducing income tax rates from 35 percent to 20 percent. It also suggested lowering non-salaried tax rates from 45 percent to 25 percent. Furthermore, it recommended raising the exemption threshold to Rs800,000. It estimated total relief of around Rs390 billion for salaried taxpayers.
The proposals also aim to simplify the tax structure by reducing withholding tax categories from 52 to 32. EPBDT further suggested lowering general sales tax from 18 percent to 15 percent over three years. At the same time, it called for abolishing the non-filer category and introducing joint tax filing for families.
In the real estate sector, the think tank proposed cutting transaction taxes under Sections 236C and 236K to 0.5 percent each. It also recommended abolishing Section 7E on deemed income tax for property. Moreover, it pushed for faster tax refunds and simplified digital systems for collection.
EPBDT also suggested reforms in agriculture taxation by shifting to a land-based system. It recommended that welfare funds such as WWF, WPPF, EOBI, and social security be managed by the private sector. In addition, it called for stronger automation and tax system digitisation.
The think tank highlighted a major backlog in tax disputes, estimating Rs5.7 trillion stuck in courts. It proposed faster judicial decisions and removal of the 30 percent pre-deposit rule for High Court appeals. It also stressed stronger alternative dispute resolution mechanisms to reduce delays.
EPBDT recommended changes in anti-avoidance rules and Section 111(4) to attract overseas investment. It also suggested restoring incentives for full equity-based industrial investment under Section 65. According to its estimates, reforms and better compliance could raise tax revenue to Rs20.5 trillion to Rs24 trillion by FY29.
The group also proposed restructuring the Federal Board of Revenue. It suggested a fixed three-year tenure for the chairman and a split between Inland Revenue and Customs boards. It further recommended greater private sector representation in tax institutions.
Under its shadow economic survey, EPBDT projected GDP growth rising from 4.2 percent in FY26 to 8.5 percent by FY31. In contrast, the baseline growth path remains much lower. The think tank also estimated the economy could expand by an additional $688 billion by FY31.
Sector-wise, it expects agriculture growth to reach 6.8 percent and industry to grow up to nine percent. The services sector is projected to reach 9.6 percent by FY31. Meanwhile, exports could rise to $78 billion and remittances to $60 billion during the same period.
EPBDT also forecast inflation falling to five percent by FY31. It expects the policy rate to ease to seven percent. Furthermore, it believes the trade gap could shrink close to zero under full reforms.
The shadow survey identified key growth sectors including housing, digital economy, manufacturing, and exports. It also included remittances and private credit expansion as major drivers. These areas together could add up to $236 billion to GDP.
In its shadow federal budget for FY2026-27, EPBDT proposed major spending cuts and reforms. It recommended downsizing government operations and privatising state-owned enterprises. It also called for pension reforms and the rationalisation of development spending.
The think tank suggested total revenue of Rs19.6 trillion for FY27. It projected FBR tax revenue at Rs14.5 trillion and non-tax income at Rs5.1 trillion. It also recommended reducing federal spending to Rs14.9 trillion.
As a result, the fiscal deficit could fall to Rs3.6 trillion, or 2.6 percent of GDP in FY27. That compares with Rs7.1 trillion, or 6.2 percent of GDP in FY25. EPBDT also estimated savings of Rs4.6 trillion over three years.
Finally, the think tank said Pakistan can achieve stable growth through private sector empowerment. It stressed industrial investment and long-term reforms. It also argued that only structural changes can end dependence on repeated IMF programmes.
