Karachi, July 21, 2024 – The Federal Board of Revenue (FBR) has set an ambitious target to elevate Pakistan’s tax-to-GDP ratio to 11.50 percent within the next three years. This initiative aims to significantly improve from the current 8.73 percent recorded for the fiscal year 2023-24.
According to official documents, the Pakistan government has tasked the FBR, the country’s apex tax agency, with enhancing the tax-to-GDP ratio based on federal tax collections. By fiscal year 2026-27, the goal is to achieve a ratio of 11.50 percent.
To achieve this, the government has set a substantial revenue collection target for the fiscal year 2024-25 at Rs 12.70 trillion. This represents a notable increase from the Rs 9.25 trillion collected in the fiscal year 2023-24. If met, this target would elevate the tax-to-GDP ratio to 10.45 percent for the current fiscal year.
Looking ahead, the FBR has projected tax collection targets of Rs 15.56 trillion for the fiscal year 2025-26 and Rs 18.05 trillion for the fiscal year 2026-27. The composition of the projected tax collection for 2026-27 includes Rs 7.67 trillion from direct taxes, Rs 2.21 trillion from customs duties, Rs 6.85 trillion from sales tax, and Rs 1.32 trillion from federal excise duty.
The FBR’s strategy to achieve these ambitious targets involves several key measures. These include broadening the tax base by bringing more businesses and individuals into the tax net, improving tax compliance through stricter enforcement and use of technology, and streamlining tax administration to reduce evasion and increase efficiency.
Additionally, the FBR plans to enhance its audit capabilities and increase the use of data analytics to identify and target high-risk areas. This approach is expected to not only boost revenue but also ensure a fairer tax system where all taxpayers contribute their due share.
The FBR’s efforts are part of a broader economic reform agenda by the Pakistan government aimed at stabilizing the economy, reducing fiscal deficits, and ensuring sustainable growth. By increasing the tax-to-GDP ratio, the government hopes to generate sufficient revenue to fund essential public services, infrastructure projects, and social programs.
However, achieving these targets will not be without challenges. The FBR will need to address issues such as tax evasion, a large informal economy, and public resistance to increased taxation. Effective implementation of reforms and sustained political support will be crucial for success.
The FBR’s aim to boost the tax-to-GDP ratio to 11.50 percent over the next three years represents a significant step towards improving Pakistan’s fiscal health. While ambitious, this goal is achievable with comprehensive reforms, improved compliance, and robust enforcement strategies. The success of this initiative will play a critical role in ensuring the country’s economic stability and growth.