Budget 2026-27: A test of direction

As Pakistan prepares to present the Budget 2026-27 in Parliament, the moment demands more than routine fiscal adjustments. It demands direction. A national budget is not merely an accounting exercise; it is a statement of priorities and a test of the state’s ability to respond to the lived realities of its people. In today’s Pakistan, where inflation continues to erode household incomes, unemployment is rising, and middle-class government employees face growing tax pressure, the budget must move beyond crisis management and begin to reflect economic dignity, social justice and practical stability. For too long, fiscal policy has remained trapped in short-term stabilisation goals. Meeting external benchmarks, managing deficits, and securing financing have often overshadowed a more fundamental question: who is bearing the real cost of adjustment? While macroeconomic stability is necessary, it becomes hollow if it is achieved through continuous pressure on salaried individuals, shrinking purchasing power of the poor, and limited relief for productive sectors. This budget must therefore signal a shift from narrow arithmetic to inclusive economic thinking. One of the most urgent reforms is the expansion of tax base. Pakistan continues to rely heavily on salaried classes, pensioners, and documented businesses, while large segments of the economy remain under-taxed or outside the system. This imbalance is not only economically inefficient but deeply unfair. Government employees, already facing rising living costs, are often overburdened through withholding taxes and limited relief. A fair fiscal system must distribute responsibility more equitably. The solution lies not in increasing pressure on existing taxpayers but in widening the base through real documentation of retail, real estate, wholesale trade, agriculture income, and digital transactions, supported by simplified procedures and strong but transparent enforcement. At the same time, inflation continues to hit the