Tax Revenues Improve in Pakistan, But Could Be Better

June 4, 2014 Taxation in Pakistan

tax revenue in PakistanISLAMABAD – During the 2013 fiscal year tax revenues in Pakistan grew by nearly 17 percent, while the amount given away as tax exemptions actually doubled.

On June 3rd the Ministry of Finance of Pakistan released the latest Pakistan Economic Survey, showing that while tax revenues in the country showed significant growth in tax revenues and economic expansion over the 2013 fiscal year, the sheer amount of tax exemptions being granted has wiped away a sizable portion of the government’s revenues.

According to the Ministry, over the first ten months of the 2013 fiscal year, total tax revenues amounted to PKR 1 786.2 billion, approximately 16.9 percent higher than in the previous financial year, when revenues reached PKR 1 527.8 billion.

The improved results have been attributed not only to an increase in economic activity in the country, but also to an improvement in the efficiency of tax collections, as tax-to-GDP rose marginally to 6.9 percent from 6.7 percent in the previous year.

Despite the growth in tax revenues, it was also shown that the situation may have been even better if the number and the size of the tax exemptions currently being granted was reduced, as in the 2013 fiscal year the government provided PKR 477 billion in exemptions to sales and income taxes, an increase of nearly 100 percent compared to the previous year.

Photo by: Alan Cleaver