Are the petrol prices in Pakistan going to observe another steep hike in the coming days or weeks? Well, apparently, it seems possible. According to media reports, during the ongoing talks for the new installment of the loan, the officials have hinted at increasing the petroleum levy (PL). It is pertinent to mention that the government is collecting Rs. 60/liter PL on both petrol and diesel and it was also increased under the demands of IMF during previous talks.
The reports suggested that it was hinted during the talks that the PL could be hiked to Rs. 100/liter from the existing rate of Rs. 60/liter on sales of major oil products. The proposal may be provided in the Finance Bill 2025, and the levy will be increased instead of imposing General Sales Tax (GST), which currently stands at 0%.
The development was also tweeted by economist Abdul Rehman, stating: “Important conditions/policies discussed for next Pakistan IMF program. The petroleum levy limit is to be enhanced to Rs 100/liter instead of GST.”
Important conditions/policies discussed for next 🇵🇰🇵🇰 IMF program.
– Legislation for tax on all retailers & wholesalers.
– Petroleum levy limit to be enhanced to Rs100/liter instead of GST.
– Zero circular debt increase in power/gas sector, means expensive electricity & gas.…
— Abdul Rehman (@AbdulRehman0292) March 19, 2024
GST Proposal
Earlier this month, the reports suggested that the IMF has recommended increasing general sales tax (GST) from 0% to 18% on several dozen items, including petroleum products. IMF estimated this “rationalization” of GST rates could generate revenue equivalent to Rs. 1,300 billion, contributing 1.3% to Pakistan’s GDP. However, the IMF didn’t assess the potential inflationary impact of this indirect taxation.
In conclusion, either the government will increase PL on petroleum goods, or GST will be imposed, resulting in a new wave of inflation for already burdened masses. The petrol and diesel prices are directly linked to the rate of inflation in Pakistan because as soon as fuel prices go up, everything becomes expensive, especially the daily commodities, hitting the day-to-day life of an ordinary person. The picture will be cleared with the finalization of the talks between Islamabad and the IMF.
What do you think about the new proposed petroleum levy for petrol and diesel? Please share your thoughts in the comments section.
Dear author, please note that Pakistan is the only country in this world where non-tax-filing people make up more than 65% of the total population. Case in point: freelancers are earning dollars but paying zero rupees in taxes. In economic terms, it means a budget deficit, and measures such as the imposition of levy and GST on products used by everyone are aimed at shortening the deficit.
I hope that soon the government is going to enact a rule where non-filers are subjected to a differential pricing model. This strategy is going to instill sense in people, and they are going to pay taxes.
Another thing, author, is that you have claimed that inflation could possibly be striking Pakistanis down.
If it is true, then could you explain to me how, on earth, around 79% of the population owns a smartphone? A smartphone is not a necessity, especially when an average person could get on with his life using a keypad-based phone. Besides, if people could afford to do one-wheeling on a motorcycle and two-wheeling on a stupid rickshaw, then that means that they have money, and paying a teeny bit of levy is not going to unload them off their money.
@Khurram
Can you give us any source of your data?
In the mean time here are some tidbits for you to enjoy:
*https://www.ndtvprofit.com/opinion/why-so-few-indians-pay-income-tax
“under India’s income tax structure, only 3% of Indians qualify to pay tax”. So that leaves 97% of their population relatively income-tax free. (Meaning they, like us, pay tax on goods and services only…🤷♂️)
*https://www.businessinsider.in/policy/economy/news/personal-income-tax-mere-0-3-pc-of-adult-population-account-for-76-pc-of-total-receipts/articleshow/104726816.cms”
“India’s Income Tax Burden: Mere 0.3% of adult population account for 76% of total personal IT (Income Tax) receipts” The title basically says it all.
*https://en.wikipedia.org/wiki/List_of_countries_by_smartphone_penetration
Pakistan’s smartphone penetration stands at 31% total. And a lot of users use multiple sims. so the “80% of the population” is dubious at best. Can you please share where you got your date?
If the rich and the big businesses in Pakistan pay their fair share of taxes and the country’s exports are actually and honestly enhanced and fully supported, maybe this hiding behind the “income tax bahana/blame shifting” can be done away with. 🤷♂️