FBR Sees Tax-to-GDP Ratio At 9% in Current Fiscal Year

The Federal Board of Revenue (FBR) revenue target for 2024-25, without budgetary measures (new taxes) is projected at Rs. 11,174 billion. The FBR has released a new report, “Evidence-Based Revenue Forecasting” for 2024-2025. According to the report, the projected target is 20.8 percent higher than the tax collection figure of Rs. 9,252 billion for 2023-24. The trend of the Tax-GDP ratio remained in the range of 8.7 percent to 9.2 percent. Last year the Tax–GDP Ratio was 8.5 percent however, during the current fiscal year (on the basis of Quarter 1 data) it has started improving and stands at 9.0 percent. The traditional methodology has been adopted to forecast FBR revenues for FY2024-25. The autonomous growth has been applied on base year FY2023-24. An increase of Rs. 1,922 billion is forecasted for FY2024-25, thus arriving at an expected revenue collection of Rs. 11,174 billion. The revenue forecasting for FY2025 is estimated at Rs. 11.17 trillion without budgetary measures. Most of the FBR taxes are buoyant and are positively correlated with actual variations in macroeconomic indicators used in the forecasting model. Hence, there is potential for achieving growth in tax revenues, provided that macroeconomic indicators perform well. With the improvement in local and global economic conditions, tax revenues are expected to increase accordingly. Similarly, by removing import restrictions further, the tax collection at the import stage shall improve as well, FBR report added.