ISLAMABAD, March 13: The government has decided to raise tax to GDP ratio from the current 12.28 per cent to 14.4 per cent by 2003-04, reliable sources told Dawn.

This means that the government will have to raise additional revenue of Rs140 billion during the next two years to achieve the target.

For this purpose, the government is likely to levy 15 per cent GST on cooking oil, vegetable ghee, electricity and pharmaceutical products very shortly, besides taxing the perks and privileges of the salaried class from the next financial year.

The sources said that as first step, government levied 15 per cent GST at actual price of urea, on supply and manufacturing of all kinds of fertilizers and raised the rate of GST from 15 per cent to 20 per cent on more than 200 raw materials.

According to a report on tax analysis prepared by Central Board of Revenue(CBR), which made available to Dawn, showed that total ratio of taxes during the last six years declined from 13.73 per cent in financial year 1995-96 to 12.28 per cent in financial year 2000-01.

Tax wise break up revealed that the ratio of total direct taxes to GDP remained in the range of 3.77 per cent to 4.16 per cent during the six years period.

On the other hand, indirect taxes to GDP ratio declined from 9.73 per cent in 1995-96 to 8.34 per cent in 2000-01.

Under the head of customs duties, the tax-GDP ratio of customs duties showed a declining trend during the last six years when it fell from 4.56pc in 1995-96 to 2.02 per cent in 2000-01.

Central Excise Duty to GDP ratio dropped from 2.62 per cent in 1995-96 to 1.54 per cent in 2000-01, while sales tax to GDP ratio increased from 2.55 per cent in 1995-96 to 4.78 per cent in 2000-01.

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

They said that the major decline in ratio of indirect taxes to GDP was due to tariff rationalization in customs duties and narrow base of indirect taxes.