ISLAMABAD: Pakistan Economic Survey 2018-19 has presented a bleak picture of fiscal development from 2018 July to March 2019, as there was zero growth in total revenue during the first nine months of the outgoing fiscal year.
The survey shows that total revenue increased to Rs3,583.7 billion (9.3pc of GDP) during the first nine months of FY2019 from Rs3,582.4 billion (10.3pc of GDP) during the corresponding period of last year, a negligible growth as compared to the growth of 13.9pc during the same period last year.
Decelerated performance of total revenues is primarily due to marginal growth of 2.8pc in tax revenues and negative growth of 16.7pc in non-tax revenues.
Tax revenue registered a growth of 2.8pc during July-March FY2019 (Rs3,162 billion or 8.2pc of GDP) compared with Rs3,076.2 billion (8.9pc of GDP) in the same period last year.
Sluggish growth in the overall tax collection came mainly from slow tax collection by the Federal Board of Revenue. Within overall tax revenue, federal taxes grew by 2.8pc during the period under review against 13.5pc growth during the same period of last year. FBR tax collection increased to Rs2,704.5 billion (7pc of GDP) during the first nine months of FY2019 compared with Rs2,627.6 billion (7.6pc of GDP) in the same period of FY2018.
On the other hand, provincial tax revenue registered a growth of 2.8pc during Jul-Mar FY2019 against 21.4pc during the same period last year. Non-tax revenue declined by 16.7pc during Jul-Mar FY2019 to Rs421.6 billion from Rs506.2 billion. Major factors responsible for this sharp decline included negative growth of SBP profit which declined by 3.5pc as the depreciation of rupee had a strong effect on rupee income, a negative growth of 33.7pc in mark-up payments (PSEs and others) and a 4.2pc fall in dividends received from PSEs and other investments.
Over the years, a narrow tax base, large number of concessions and exemptions, tax administration challenges and weak tax compliance resulted in a low tax to GDP ratio. In this connection, the present government aims to introduce measures to remove these weaknesses and disincentives in the tax system. The government intends to implement such fiscal reforms that ensure an and fair tax system which will be proficient to generate sufficient revenue to meet a large portion of public expenditure and investment needs, leading to a decline in fiscal deficit and falling debt-to-GDP ratio.