Petroleum products goldmine for govt

ISLAMABAD: The government is collecting a major chunk of its spending through taxes on petroleum products as they pay hefty amount of Rs34.95 extra on per litre of diesel in form of taxes and other heads whereas the ex-refinery cost of diesel stands at Rs70.30 per litre.

POL products are one of the 10 top revenue spinners as 45 percent of total sales tax is collected from the petroleum products.

Similarly, on one litre of petrol, the sizeable amount of Rs29.58 is also being fleeced additionally as the ex-refinery cost of one litre petrol is Rs62.38.

The government is making mammoth amount of Rs850 billion through sales tax and petroleum levy.

According to the FBR spokesman, the taxation machinery makes Rs400 billion only through sales tax from petroleum products while the remaining Rs450 billion is collected through petroleum levy that goes to the Finance Ministry. According to the official documents showing the taxes and other margins on petroleum products, the government is making money of Rs28.38 on every litre of diesel (Rs20.38 as sales tax and Rs10 as petroleum levy) and the consumer, in addition to taxes of Rs28.38 also pays Rs1.49 as IFEM (inland freight equalisation margin), Rs2.41 as distributor margin and Rs2.67 as dealer margin on every litre of diesel.

Inland freight equalisation margin is used to ensure the uniform price of the petroleum products across the country.

And on one litre of petrol (motor gasoline), it is minting money of Rs19.85 per litre (Rs9.98 as sales tax and Rs10 as petroleum levy). Moreover, the consumer pays on one litre of petrol the amount of Rs3.83 as IFEM, Rs2.55 as distributor margin and Rs3.55 as dealer margin.

Earlier, General Sales Tax on petrol was at 17 percent which the interim government has slashed to 12 percent. Similarly the GST was 31 percent on high speed diesel which has now been decreased to 24 percent. Likewise the interim government has imposed tax of Rs10 per litre on petrol and Rs8 per litre on diesel.

The consumption for petrol in the country stands at 30 percent whereas the usage of the diesel is 70 percent.

The consumers’ swindling does not stop here as they also pay Rs19.17 extra in the form of tax and other heads on one litre of kerosene while its ex-refinery price stands at Rs65.17.

The consumers pay Rs9.04 as sales tax on one litre of kerosene and Rs6.00 as petroleum levy. Apart from it, the consumers also pay Rs2.55 as IFEM and Rs1.58 as distributor margin.

And on light diesel oil (LDO), the consumers have not been spared as they also pay Rs9.19 more on one litre of LDO in the shape of taxes and other heads.

And the fuel used in airplanes such as JP-I, JP-4 and JP-8, the government is charging sales tax of Rs11.13, Rs10.23 and Rs11.08 on one litre respectively.