FBR confident of raising tax-to-GDP ratio despite shortfall

Despite concerns that FBR’s tax collection may fall short of the Rs12.97 trillion target for the current fiscal year, the top tax authority remains hopeful of achieving the goal of raising the tax-to-GDP ratio to 10.6 per cent as outlined in the ongoing IMF programme. The tax-to-GDP ratio was recorded at around 9.6pc and 10.8pc in the first and second quarters, respectively. FBR officials anticipate the ratio will remain slightly below 10.6pc in the third quarter but exceed 11pc in the fourth quarter. “Overall, we believe that we will achieve the targeted tax-to-GDP ratio for the whole year,” a senior FBR official told Dawn. Under the IMF agreement, the government is committed to raising the tax-to-GDP ratio by at least 3pc to 13-13.3pc over the 37-month duration of the funding programme. This ratio, which indicates how efficiently a government mobilises economic resources through taxation, is projected to be 8.77pc in FY24, down from 9.22pc in FY22.