The National Assembly’s Standing Committee on Finance has deferred the approval of sweeping tax concessions for Pakistan International Airlines (PIA), leaving the federal government with a stark choice to either scrap the exemptions or extend them across the entire aviation industry.
The legislative gridlock intensified after Privatisation Secretary Usman Bajwa revealed that the Arif Habib-led consortium, which acquired a 100 percent stake in the national flag carrier for Rs180 billion, had not demanded exclusive preferential treatment.
Instead, the buyers had requested a generic 15-year concessions to maintain long-term policy consistency. Bajwa disclosed that it was the government’s own initiative to restrict the 18 percent sales tax and customs duty exemptions strictly to PIA, a revelation that flatly contradicted initial political perceptions.
Chaired by the PPP’s Syed Naveed Qamar, the parliamentary committee heavily criticised the targeted fiscal incentives, warning that the move would create an unjust monopoly and severely damage existing and future private sector airlines. Lawmakers strongly argued against creating an uneven playing field at the expense of domestic competitors.
The Finance Ministry remains caught in a severe policy bind. Minister of State for Finance Bilal Azhar Kayani warned that rolling back the tax concessions could completely derail the privatisation deal, which is scheduled for formal closure by mid-July, as doing so would directly violate the signed sale-purchase agreement.
Compounding the dilemma is Pakistan’s ongoing International Monetary Fund (IMF) programme. Finance Secretary Imdadullah Bosal noted that securing the initial single-airline exemption from the IMF required immense effort, and expanding the relief package to cover all private operators would be exceptionally difficult. Treasury officials plan to re-engage with the global lender to find a viable solution before returning to the committee for a final vote.
