• Wednesday, Jan 27, 2021
  • Last Update : 07:40 pm

Tax-GDP ratio to improve by FY23

  • Published at 12:52 am December 4th, 2020

The tax to GDP ratio in the current fiscal year has been estimated at 11.9 per cent

The government has projected a marginal improvement in the tax to gross domestic product (GDP) ratio in fiscal 2022-23 despite the pandemic taking a toll on the country's revenue collections this financial year.

The tax-to-GDP ratio is a ratio of a nation's tax revenue relative to its gross domestic product, the value of goods and services produced in a country during a certain period. The ratio is also a marker of how well the government controls a country's economic resources.

According to an official document, the tax to GDP ratio in the current fiscal year has been estimated at 11.9 per cent, while it was 12.4 per cent in fiscal 2019-20. 

Even though the public health crisishas hit the revenue-generating sectors hard, the government estimates it would rise to 12.2 per cent in fiscal 2022-23.

The document states that of the 12.2 per cent of the projected revenue-GDP ratio in the next fiscal year, 10.6 per cent would come from the National Board of Revenue (NBR), 0.6 per cent from non-NBR sources and the remaining 1.1 per cent from non-tax sources.

Similarly, this fiscal year, the government has projected to get 10.4 per cent from the National Board of Revenue (NBR), 0.5 per cent from non-NBR sources and 1 per cent from non-tax sources.

In fiscal 2019-20, the government had originally projected to boost the tax to GDP ratio to 13.1 per cent -- 11.3 per cent from NBR, 0.5 per cent from non-NBR sources and 1.3 per cent from non-tax sources. However, the target was subsequently lowered to 12.4 per cent in the wake of Covid-19.

Due to the implementation of the new value-added tax (VAT) law, the revenue collection has declined, as per the document. Currently, the tax to GDP ratio of the country is much lower than the neighbouring and other developing countries.

According to data from the October 2019 issue of the World Economic Outlook, the tax to GDP ratio of the country has been 9.9 per cent on an average since 2015-2019, while it is 19.8 per cent for India, 23.9 per cent for Nepal, 14.7 per cent for Pakistan and 13.5 per cent for Sri Lanka.

The ratio is 25.6 per cent for developing countries and 35.9 per cent for developed countries, according to the data.

The document says that the government has taken various reform initiatives to improve the overall revenue collection. Automated systems have been introduced for VAT, and other tax collections, along with bonded warehouses. The new Customs Act is also on the anvil.

Apart from the reforms programmes, modernisation of the tax administration, expansion of tax net, development in tax compliance and law amendment and simplification would create a significant positive impact on revenue collections in the future, as per the document.

Facebook 58
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail