Non-tax bonanza pushes tax ratio to 21-year high

The overall tax-to-GDP ratio increased by a record 3.2 percentage points in fiscal year 2025 to reach 15.7pc — the highest in over two decades. The record earnings came on the back of heavy taxes imposed by the government to implement strict conditions outlined in the IMF loan programme and last-minute windfalls from non-tax revenue (NTRs). During FY2024-25, the non-tax revenue grew by 68 per cent against a 26pc growth in tax revenues, indicating the government’s focus remained more on revenue numbers than tax reforms. According to the fiscal operations data released by the Ministry of Finance on Monday, the tax-to-GDP ratio has hit a 21-year peak of 15.7pc. The previous high was 18pc in FY04. Since then, the ratio has been faltering between 10 to 15pc, except for 15.5pc and 15.2pc in FY17 and FY18, respectively and then again at 15pc in FY20 — all under IMF monitoring. The growth of 3.2 percentage points in the overall tax-to-GDP last fiscal year was also the highest single-year increase. The previous record was 2.3pc in FY20 when the then government had imposed massive taxes as part of the IMF loan programme.