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Tax-to-GDP ratio likely to go up
By Kalbe Ali
Thursday, 03 Jun, 2010
The total size of economy which is estimated at Rs14.66 trillion currently is projected to be Rs16.97 trillion by June 30 next year and Rs22.41 trillion by 2012-13. - File Photo.
ISLAMABAD: Amid expectations of an increase in revenue after imposition of value added tax (VAT) and reforms in the Federal Board of Revenue (FBR), the finance ministry has said that the tax-to-GDP (Gross Domestic Product) ratio is likely to rise from current year’s 10.5 per cent to 10.9 per cent in 2010-11 and 12.2 per cent in 2012-13.
Rolling economic targets for three fiscal years finalised by the ministry also envisage a reduction in government expenditures from 20 per cent to 19.1 per cent of the GDP next year.
According to sources, the targets fixed in the Medium-Term Budgetary Framework (MTBF) aim at reducing fiscal deficit, current expenditures, revenue deficit and public debt and increasing development expenditures by 2013.
The MTBF said the planned cuts due to rationalisation of the size of government machinery on recommendations made by the Pay and Pension Commission would result in a reduction of current expenditures from 16.8 per cent of the GDP to 15.4 per cent during the next fiscal year and 13.9 per cent by 2012-13.
The development expenditure, estimated at 3.2 per cent of the GDP during the current fiscal year, is projected to increase to 3.7 per cent next year and rise to 5.2 per cent by 2012-13.
The total revenue of the government is set to increase from current year’s 14.7 per cent to 15.1 per cent of the GDP in 2010-11.
Collection by the FBR will increase from 9.4 per cent to 9.8 per cent of the GDP.
The MTBF said that revenue deficit would be reduced to 0.3 per cent of the GDP from the current 2.1 per cent.
Fiscal deficit has been projected to remain at four per cent of the GDP in the next fiscal year and gradually drop to 3.3 per cent over three years.
The framework said that public debt which stood at 54.9 per cent of the GDP in the current fiscal year would be reduced to 51.7 per cent in 2010-11 and 46.4 per cent by the end of June 2013.
It projects bringing down inflation to 9.5 per cent next year from 12 per cent and to seven per cent by the end of 2012-13 despite an increase in power tariff and other similar measures being adopted by the government.
The real GDP growth, estimated at 4.1 per cent in 2009-10, has been projected at 4.5 per cent in 2010-11.
The total size of economy which is estimated at Rs14.66 trillion currently is projected to be Rs16.97 trillion by June 30 next year and Rs22.41 trillion by 2012-13.
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All i just want to say is Aameen, Aameen, Aameen, Aameen, Aameen
