Petrol Levy May Reach Rs. 60 Per Litre
After two consecutive cuts in petrol prices, the federal government is a victor till date. But unfortunately, this win in terms of lowering the fuel prices is near to die soon. Suffice it to say, the incumbent civilian leadership is unable to maintain the short-term relief.
In a recent development, the government is planning to increase petrol levy by Rs. 10 per litre on petroleum products taking it to Rs. 60 per litre. Mind you, the current levy rate is Rs. 50 per litre.
The Reason
The reason behind the move is to generate a non-tax revenue of Rs. 2.9 trillion for next financial year. Meaning, an expected hike in fuel prices for the next fortnight.
As the government is considering to increase expenditure on pension payments and functioning of the civil government by 30% this year. As per the reports, the Finance Ministry has proposed to collect Rs. 870 from this source.
Although there is an expectation of crude oil prices reaching $100 per barrel by the end of the year due to Saudi Arabia reducing production by 100,000 barrels per day, the Ministry of Finance has suggested raising rates. The projected petroleum prices for the upcoming fiscal year will remain elevated, as the central bank estimates an average exchange rate of Rs308 per dollar.
In the ongoing fiscal year, the government aimed to collect Rs855 billion through the petroleum levy. However, in the first nine months of this fiscal year, the collection only amounted to Rs362 billion.
Due to internal political obstacles, the government is encountering difficulties in finding creative approaches to enhance tax collection. The implementation of suggestions put forth by the Reform and Revenue Mobilization Commission (RRMC) is being hindered.
According to the RRMC report, the adoption of five measures has the potential to generate an extra Rs635 billion in revenue in the upcoming fiscal year. Among these measures is the discontinuation of the final tax regime for exporters, a change that could yield Rs300 billion in annual revenues for the Federal Board of Revenue (FBR).