Karachi, January 30, 2024 – Pakistan has made significant strides in fiscal management as the tax-to-GDP ratio rose to 4.56 percent during the first half (July – December) of the fiscal year 2023-24, according to recent data released by the Ministry of Finance.
This improvement reflects the government’s commitment to enhancing revenue collection and strengthening the nation’s economic foundation.
The data unveiled that the total tax revenue collected by both federal and provincial governments amounted to Rs 4.83 trillion in the first half of the fiscal year 2023-24, aligning with a GDP of Rs 105.82 trillion. In comparison, the tax-to-GDP ratio during the same period in the previous fiscal year (1HFY23) was 4.40 percent, with total tax revenue standing at Rs 3.73 trillion and a GDP of Rs 84.66 trillion.
Breaking down the figures, the federal tax collection during the first half of the fiscal year 2023-24 reached Rs 4.47 trillion, showcasing a substantial increase from Rs 3.43 trillion during the corresponding period in the previous fiscal year. The provincial governments also played a significant role by contributing Rs 365 billion to the overall tax revenue, compared to Rs 303 billion in the first half of the previous fiscal year.
Pakistan, however, still grapples with having one of the lowest tax-to-GDP ratios in the region, indicating the need for continued efforts to bolster tax collection and expand the tax base. The government recognizes the imperative to bring potential taxpayers into the system to achieve sustainable fiscal growth.
The increased tax-to-GDP ratio demonstrates the success of targeted fiscal policies, reforms, and efforts to streamline the taxation process. The government’s focus on broadening the tax base, improving compliance, and enhancing efficiency in revenue collection has yielded positive results.
Experts suggest that sustaining this positive momentum will be essential for Pakistan’s economic development, ensuring adequate resources for public services, infrastructure development, and other essential sectors. The improvement in the tax-to-GDP ratio is indicative of a more robust and resilient fiscal landscape, contributing to the overall economic stability and growth prospects of the country.
While celebrating the progress made in revenue collection, policymakers and financial analysts emphasize the need for continuous efforts to further enhance tax compliance, efficiency, and transparency. By addressing these areas, Pakistan can continue to build a more resilient and self-sustaining fiscal framework that supports long-term economic development.
