FPCCI laments exorbitant petroleum levy, sales tax

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday dismayed over ‘significant’ levy, sales tax and margin on petroleum products, which it said are pushing up business cost.

The FPCCI said the government has been charging very high petroleum levy and general sales tax on petroleum products.

In Aug 2018, Brent price in the international market was $72/barrel and now it is around $50 a barrel, showing a decline of around $22. However, local petrol price increased to Rs103/litre from Rs95/litre during the period. Diesel prices came down to Rs108/litre from Rs112/litre.

The FPCCI said the government reduced petroleum levy on petrol by about Rs4/litre to Rs24 from almost Rs28 and cut levy on diesel by Rs2/litre.

“But we think that there is still

great cushion to cut this levy further as the government is still charging a standard rate of 17 percent general sales tax across the board to generate additional revenues ,” Anjum Nisar, president of FPCCI said while talking to a trade a delegation.

“The government can compensate the industrial and general consumers by slashing levies and taxes on oil. Regular attempt of economic managers to increase oil prices along with hike in power and gas tariffs will ultimately harm the government’s overall move of reducing production cost in the country.”

Pakistan’s economy is going through a challenging time due to the second outbreak of Covid-19. GDP ratio was further stretched owing to nominal growth in exports mainly due to high cost of doing business.

“With a view to improve the cash flow of businesses during the crisis, the authorities will have to support the economy through reducing taxes,” said Nisar. “Businesses need maximum relief.”

The government was charging 0.5 percent general sales tax on light diesel oil, 2 percent on kerosene, 8 percent on petrol and 13 percent on high speed diesel until January 2019. But, now it is charging a total of about Rs42/litre tax on petrol and about Rs59/litre on high speed diesel.

“The government has been charging high levy on petroleum products to minimize its revenue losses instead of letting consumers benefit fully from the reduction in global oil prices during pandemic-hit economic slowdown,” FPCCI president said.

The FPCCI called upon the government to address the key issues of trade and industry, facilitate the economic growth along with improving tax revenue of the government.