ISLAMABAD, June 13: The tax-to-GDP ratio has declined from 11.3 per cent last year to 10.9 per cent during the current financial year.

According to Economic Survey 2001-02, released on Thursday, the prescribed tax-to-GDP ratio of 10.9 per cent will be achieved if the Central Board of Revenue (CBR) collected Rs414.3 billion during the current financial year.

The target set for the current financial year was over 12 per cent. But, if the revenue collection missed the target and remained at around Rs400 billion, the tax-to-GDP ratio will be around 7 per cent.

The report says that the tax-revenue in relation to GDP has remained stagnant at 10-13 per cent during the last decade.

To increase the tax-to-GDP ratio, the report suggested reform in the tax system with focus on better tax enforcement and bringing more taxpayers into tax net.

It also proposed reducing the number of taxes and contribution in provinces, strengthening of tax administration and streamlining of tax laws to make it a tax friendly.

The decline in tax-to-GDP ratio calls for a greater deal of effort to widen the tax base to mobilize additional resources to bring this ratio at par with other countries, which were more or less at the same levels of economic development stage.

The share of direct taxes in total taxes have doubled from 18 per cent in 1990-91 to 35 per cent in 2001-2002, while the share of indirect taxes has correspondingly declined from 82 per cent to 65 per cent during the same period under review.

Tax wise break up showed, that the share of customs duty in indirect taxes declined from 54.9 per cent in 1990-91 to 18.9 per cent during the year 2001-02.

Sales tax share in indirect taxes increased from 17.6 per cent in the year 1990-91 to 63.5 per cent in the year 2001-02, while share of central excise declined from 27 per cent in the year 1990-91 to 17.6 per cent in the year 2001-02.