Criticism of Federal Budget 2025-26 Tax Measures on Solar Energy and Textile Sector

Prominent industrialist Abdul Shakoor Khatri has expressed deep disappointment and concern over the imposition of an 18% tax on solar energy in the federal budget for 2025-26. Khatri, the founding chairman of the All-Pakistan Textile Processing Mills Association (APTPMA), believes this tax is counterproductive to Prime Minister Shehbaz Sharif's vision of an energy-efficient Pakistan. The business community had expected an industry-friendly and people-centric financial plan, but instead, the new taxation measures have further burdened industries already struggling with high production costs.

Key Takeaways:

• Abdul Shakoor Khatri has criticized the 18% tax on solar energy in the federal budget 2025-26, calling it counterproductive to Prime Minister Shehbaz Sharif's vision of an energy-efficient Pakistan.
• The business community had expected an industry-friendly and people-centric financial plan, but the new taxation measures have further burdened industries already struggling with high production costs.
• Electricity prices have skyrocketed, making industrial operations uncompetitive, and taxing solar energy removes the last affordable alternative, forcing industries to rely on expensive grid electricity.
• Pakistan's policies seem to push industries backward compared to global trends, where governments incentivize renewable energy to reduce costs and enhance industrial efficiency.
• The budget has failed to address the textile sector's challenges, particularly the sharp decline in local cotton production, and instead, burdens imports with taxes.
• The government should eliminate duties on cotton to sustain industrial operations and preserve employment, and introduce special incentives for the textile industry, including easier access to bank loans for modern machinery imports.
• A cohesive policy benefiting the entire textile value chain is needed, from ginning and dyeing to weaving and garment manufacturing, with collaboration from the State Bank and Finance Ministry.
• Concessions for senior citizens, including exemption from tax return filings, and completion of critical infrastructure projects like Keti Bandar and the K-4 water scheme are also required.
• Without corrective measures, the budget's current framework risks stifling industrial growth and exacerbating unemployment.

Statistics:

• 18% tax on solar energy in the federal budget 2025-26.
• Electricity prices have skyrocketed, making industrial operations uncompetitive.
• Local cotton production has declined, and the government should eliminate duties on cotton to sustain industrial operations and preserve employment.

Sources:

• Press Release of Abdul Shakoor Khatri's views on the federal budget 2025-26.