Government increases Sales Tax on Petroleum Products by 5%

fuel price

ISLAMABAD: The government has increased the sales tax rate on petroleum products by 5%, making it 22% from 17% previously, despite clear orders from Supreme Court against it.

The decision was made on Tuesday and the new rates will be applicable from January 1, 2015. The 5% increase in the tax rates of POL makes the tax burden on consumers to 30%. The increased tax rate will result in an additional Rs. 48 billion in revenues to FBR annually.

The consumers would have gotten an additional 50% benefit in the POL prices due to a sharp decrease in the global oil prices earlier this month if the government had not increased the tax rate. The revenues of FBR were slumping due to the continues decline in the oil prices, so they decided to increase the tax rate instead of correcting the politically motivated tax benefits and the tax machinery in general. Bear in mind that FBR is considered the 8th most corrupt institution of Pakistan according to a report by Transparency International.

The government has levied a tax of 22% on sale of petrol, diesel, HOBC, and kerosene as opposed to the general sales tax rate of 17%, increasing the tax burden on consumers to about 30%.

The Federal Board of Revenue issued an SRO to notify the change in the tax rate to make the decision effective without scrutiny following which the new POL prices would be announced to account for the increase in sales tax rate of POL products. With the new prices in effect, the consumers will be denied the benefits of a decrease in the international oil prices, which stands at close to $58 per barrel.

It is to be noted that Supreme Court has restrained the government from increasing tax burden on the consumers through executive orders, but the government resorted to odious SROs to impose the taxes.

The government uses such SROs from time to time to please different interest groups. 3 such SROs are also in effect that protects the local auto industry of Pakistan.

via Express Tribune

Fahad Ullah

I build products and review cars for PakWheels. I am also famous for typing more words than anyone wants to read.

  • ARK

    The petroleum prices in Pakistan is not at par with international markets because Government never follow the international markets. The Government always interested in increasing trend of petroleum prices in international markets.

    Let us start with modest scale of analyzing about the petroleum price in Pakistan during the regime of General Pervez Musharraf in the year 2007. The high speed diesel was selling at Rs.38-39 per liter and petrol was selling at 54-57 liter.

    During the year 2007 the Brent Crude Prices in international markets were at US$ 75.00 per barrel but the dollar was standing at Rs.60-62. Now the Brent Crude Prices plunged at more than five and half year low and touched US$ 55.00 per barrel. Since International Monetary Funds dominate the Pakistan economy so the present government is under pressure of IMF and unable to pass on the benefits of the decreasing petroleum prices to the consumers. IMF advised the Pakistan Government to increase the sales tax from 17% to 22%.

    Rafique Khan

    Rafique Khan – Karachi

    The falling trend of crude prices in international markets for the last couple of months the Government is worried about huge losses to their exchequer in terms of sales and levy. The petroleum prices are high the Government collects huge funds from the consumers against Sales Tax and Levy and when prices are low then FBR is unable to achieve their target for collection of taxes. Now Government has decided to increase Sales Tax on petroleum prices from 17% to 22% so there is an increase of 5% to achieve their tax collection targets.

    The above increase in Sales Tax is not justified on the part of common people of Pakistan but it is justified on the part of corrupt politicians, ministers. The corrupt politicians and ministers are unable to pay taxes to the Government so FBR and IMF both are running short of funds in shape of revenue collection and loan recoveries. The above increase in Sales Tax is advised by IMF and seconded by FBR to achieve the revenue collection targets.

    The Government especially Nawaz Sharif and his cabinet ministers are taking undue advantage of Peshawar massacre. The government has taken sigh of relief because of political scenario has been changed in the country and now there is no any pressure from the opposition parties in the country. It is temporary relief for the Government because masses still believe in ****GO NAWAZ GO Slogan****

  • Saboor Ali

    darna khatam gov ki harkate shuru

  • saad

    its ok for me if this really help Pakistan

  • Saboor Ali

    it going into the pocket of politician not in pakistan expenses/national fund

  • saad

    thats why i said its ok if it help PAKistan

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