ISLAMABAD: In line with the IMF demands, the government has agreed to jack up annual collection through the Petroleum Levy up to Rs250-300 billion during the current fiscal year 2021-22 in a bid to revive the stalled Fund program.
With the existing Petroleum Levy on both petrol and diesel just standing close to Rs10 per liter, this will further go up in coming weeks and months. The Petroleum Levy may be increased up to Rs15 per liter at least for showing the desired collection of Rs250-300 billion till June 30, 2022.
The International Monetary Fund (IMF) conveyed its annoyance when the government kept the petroleum prices unchanged with effect from November 1, 2021, mainly because Pakistan and the Fund staff had agreed to jack up the Petroleum Levy for collecting Rs250 to Rs300 billion annually against the earlier envisaged target of Rs610 billion.
The IMF also pointed out that the government created Price Differential Category (PDC) for not raising the POL prices and recommended abolishing this mechanism by raising the fortnightly pricing mechanism.
This shortfall on account of Petroleum Levy will be compensated through additional taxation measures of Rs200 to Rs300 billion on front of FBR through withdrawal of GST exemptions, adjusting Personal Income Tax and enhancing Regulatory Duty (RD) on luxury items such as imported vehicles, cosmetics, and other such products.
Now the government is forced to move towards increasing the petroleum prices whereby the levy on petrol has been jacked up by Rs4. So the overall levy went up from Rs5.62 per liter to Rs9.62 per liter. On diesel, the levy was increased from Rs5.14 per liter to Rs9.14 per liter with the recent surge in POL prices announced by the government in the early hours of Friday.
“In order to fetch the desired amount of Rs250-300 billion through petroleum, the existing level will be further jacked up to the tune of Rs15 per liter at least and in some cases this levy may see further increase if the POL prices in the international market witness a reduction,” said top official sources while talking to The News here on Friday.
The Brent Crude oil in the international market has witnessed a reduction and stood at $81 per barrel; earlier it was standing at $84 per barrel. If the POL prices further go up in the international market, it will result in increased difficulties for all oil-importing countries.
Pakistan’s Sensitive Price Index (SPI) has been witnessing rising trends for the last several weeks and touched 15.2 percent on weekly basis on Friday against the level of 14.5 percent just a week earlier. “This kind of surge in SPI is really worrisome as it is just killing the lowest quintile income groups,” said one independent economist while talking to this scribe here on Friday.
With effect from July 1, 2021, the government raised the POL prices nine times. The government has increased the prices of POL products by Rs37.26 per liter with effect from June 15, 2021, to November 5, 2021.
The price of petrol went up by Rs37.26 per liter and diesel by Rs31.86 per liter after the announcement of the budget for 2021-22 in the last four months and five days.
On petrol, there is a total of Rs22.64 per liter taxes, duties, margin, and levy and on diesel total taxes, duties, margin, and levy stand at Rs25.54 per liter. The GST on petrol stands at Rs2.6 per liter and Rs9.2 per liter on diesel at the moment with effect from November 5, 2021.
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