What is Latest Tax to GDP Ratio of Pakistan
What is the Latest Tax to-GDP Ratio of Pakistan? Tax-to-GDP ratio currently is at 9.2 percent according to the Federal Board of Revenue (FBR) report on 2021-22 performance.
According to the report, the tax-to-GDP ratio of the country has been low compared to other regional countries. But it has increased significantly in recent years. Previously it was 4.4 percent in 1950 which has now increased to 9.2 percent.
FBR Chairman Asim Ahmad said that the fiscal year 2021-22 (FY22) faced:
- a global wave of inflation,
- supply chain disruptions,
- high-interest rates,
- and devaluation of the currencies.
Tax collections during FY22 were Rs. 1,403.5 billion higher than the previous fiscal year, recording an impressive growth of 29 percent, FBR Chairman added.
What is the tax GDP ratio?
It measures the size of a country’s tax revenue compared to its GDP. The higher the tax-to-GDP ratio, the better the country’s financial position.
What are the main reasons of low tax-to-GDP ratio in Pakistan?
The following have adversely affected our tax-to-GDP ratio:
- Tax concessions,
- Less tax contributions by major sectors of Pakistan, i.e., agriculture, industry, and services.
- weak enforcement,
- Tax Exemptions to some sectors
- low compliance by taxpayers,
- reliance on indirect taxes and
- issues in improving tax administration
