Pakistan’s tax-to-GDP ratio slips to 11.6 percent

Pakistan’s tax-to-GDP ratio slips to 11.6 percent

ISLAMABAD: Pakistan’s tax-to-GDP ratio has slipped to 11.6 percent in fiscal year 2018/2019 as compared with 13 percent in the preceding fiscal year, revealed by date released by the ministry of finance.

The revenue collection authorities of the federal and provincial governments unable to achieve collection targets during the last fiscal year. The primary reason may be the general elections held in July 2018.

After the general elections in 2018 the ruling PTI took the charge of new government in August 2018. However, after coming into power the PTI government presented two supplementary budgets to address the revenue shortfall. But the all efforts resulted in failure as the revenue collecting agency of the federal government i.e. Federal Board of Revenue (FBR) posted Rs561 billion shortfall for the fiscal year 2018/2019.

The FBR was assigned revenue collection target of Rs4.43 trillion for fiscal year 2018/2019. However, it was revised downward to Rs4.39 trillion. The FBR collected Rs3,829 billion in fiscal year 2018/2019 as compared with Rs3,842 in the preceding fiscal year.

The total tax revenue collected by federal and provincial revenue authorities was at Rs4,473 billion as compared with Rs4,467 billion in the preceding fiscal year. The FBR could achieve the ratio of 9.93 percent in 2018/2019 after posting total collection below the total of the preceding fiscal year.

During the last fiscal year there were two tax amnesty schemes were offered for undeclared foreign and domestic assets in order to boost revenue collection and document the economy. Yet the collection was below the desired level.

The frequent change in FBR highrarchy might hurt the collection effort. Three chairmen were posted during the fiscal year. Ms. Rukhsana Yasmin was appointed On July 02, 2018 as chairperson. Muhammad Jehanzeb Khan was appointed as chairman on August 29, 2018 and then the present chairman Syed Muhammad Shabbar Zaidi was appointed on May 10, 2019.