Petroleum Levy to be Increased to Rs. 100/Liter?
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.