Ayesha Mudassar

The government’s fiscal consolidation measures have helped Pakistan attain higher revenue during the current fiscal year (2022-23). However, a sharp contraction in imports led to stagnation in revenue from international trade, said World Bank economists at a recent seminar. The World Bank Senior Economist Derek HC Chen said Pakistan’s revenue increased by 18.8% on a year-on-year (YoY) basis during the first half (July-December) of the current fiscal year, moderately higher than the 18% growth during the corresponding period of the previous fiscal year. This improvement became possible on account of higher tax and non-tax revenue.

The lending agency’s economist Adnan Ashraf Ghumman said the major drivers of growth in tax revenue were direct taxes and Petroleum Development Levy (PDL). He said revenue from direct taxes increased by almost 50% and revenue from the PDL more than doubled during the first half of FY23. The PDL was increased to Rs10 per liter at the start of July 2022, and it was gradually hiked to Rs50 per liter between July and November 2022.

During the first half of FY23, revenue from excise duty and sales tax on services increased by 12.9% and 27.9%, respectively. On the other side, import controls led to a decline of 2.8% in revenue from international trade. Furthermore, non-tax revenue increased despite lower revenue from the regulatory authorities. The non-tax revenue increased by 14.9% during H1FY23 compared to 12.6% during H1 FY22. The government’s interest receipts from lending to public sector enterprises (PSEs) and royalties on oil and gas were the main contributors to the increase in non-tax revenue. Revenue from the State Bank of Pakistan (SBP) and Pakistan Telecommunication Authority (PTA) declined by 2.3% and 16.2%, respectively.

Credit: Independent News Pakistan-WealthPk