Business
Pakistan Mulls Higher Petroleum Levy to Meet IMF Demands
The federal government is considering increasing the petroleum levy threshold to Rs. 100 per liter in the upcoming budget to meet IMF demands, sources revealed.
This move comes in response to pressure from the International Monetary Fund (IMF), which is pushing for an integrated general sales tax (GST) to achieve the benefits of value-added tax (VAT) for documentation and digitization.
ALSO READ
Punjab Schools Declare Summer Vacations from June 1
According to a report in Dawn, the government is exploring alternative revenue streams to meet IMF conditions and secure cheaper loans and grants from multilateral institutions.
The proposed carbon tax and increased petroleum levy are part of a broader effort to increase revenue and reduce energy costs and circular debt.
Currently, the government collects a petroleum levy of Rs. 60 per liter on both petrol and high-speed diesel, generating Rs. 720 billion in the first nine months of the current fiscal year.
Under IMF commitments, the government aims to collect Rs. 869 billion as petroleum levy during the ongoing fiscal year (FY24).
Other revenue-enhancing proposals include a 1% withholding tax on non-filer bank transactions of Rs. 50,000 or more and increasing the tax-to-GDP ratio by 3%.
The government plans to expand the tax base by converting GST into a true VAT system, extending the tax base to retail and wholesale sectors, agriculture, and implementing uniform income tax rates across all income sources.
The government’s commitment to ongoing adjustments in gas and electricity tariffs and efforts to reduce energy costs and circular debt is expected to continue in the next fiscal year, with a tight monetary policy stance and a focus on adopting a market-based exchange rate.
