IPR issues fact sheet

LAHORE: The Institute for Policy Reforms (IPR) on Wednesday issued a fact sheet, revealing the true impact of the recent SRO for increase in the general sales tax (GST) on petroleum products, a statement said.
In terms of its revenue impact, IPR ranks it the largest SRO in Pakistan’s history. In one stroke, the government has increased proportionate tax rate on petroleum by 60 percent, it said.
The fact sheet estimates total welfare loss of Rs80 billion to the people. This SRO negates the potential benefits to the economy from falling oil prices.
The general perception is that the GST rate increase will only partially recover the estimated Rs70 billion losses in the public revenue from the decline in oil prices.
In reality, the government will collect Rs36 billion more revenue than it did before prices declined. This is sleight of hand public financing at the expense of the consumers.
The government has increased the GST by a far greater margin than was needed to compensate for the revenue losses, it said, adding, high-speed diesel, a product consumed mostly by low-income users, sees the greatest increase in the GST rate.