KARACHI: Government is likely to set tax revenue collection target of Rs7.25trn for FY23 (9.2% of GDP), which is up 19% from the revised target of Rs6.1trn (9% of GDP) for FY22.
According to salient features of the Federal Budget FY23 issued by Topline Securities, government is likely to target additional taxes of Rs800bn to Rs900bn through nominal GDP growth whereas additional tax measures of Rs400-450bn will be taken to achieve Rs7.25trn target for FY23.
IMF has already demanded government to remove tax exemptions & subsidies and increase the rate of taxes on few sectors as per news reports.
Non-tax revenue target for FY23 is estimated at Rs1.6trn (2.1% of GDP) as against Rs2trn (3.1% of GDP) budgeted for FY22. Lower target is due to expected decline in petroleum development levy (PDL) during the year.
With likely slowdown in economic activity, total revenue target (tax & non-tax) of Rs9trn will be difficult to achieve. However, it will depend on how much new taxes government imposes in Budget FY23.
Net revenue receipts after provincial share is budgeted at Rs4.7trn for FY23 as against Rs4.5trn for FY22 budgeted.
Current expenditure target is likely to be at 12% of GDP in FY23 or Rs8trn which is around 11% YoY higher than what was budgeted in FY22.