Govt rules out immediate petroleum levy cut, to review in next budget
Planning Minister Ahsan Iqbal has ruled out an immediate cut in the petroleum levy despite Jamaat-e-Islami pressure. A committee will look at reducing it in phases from the next budget.
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- Ahsan Iqbal ruled out an immediate cut in the petroleum levy
- A committee will examine phased reduction for the next budget
- Taxes on fuel total nearly Rs106 per litre, including Rs80 levy
- Rs4.4 trillion collected in levy from fiscal 2022-23 to 2025-26
Planning Minister Ahsan Iqbal on Thursday ruled out an immediate reduction in petroleum levy rates despite pressure from Jamaat-e-Islami. He said the government could consider a gradual decrease from the next federal budget.
A committee has been formed to examine proposals for reducing the levy in phases. Deputy Prime Minister Ishaq Dar, Ahsan Iqbal and Rana Sanaullah will represent the government, while Jamaat-e-Islami will nominate three members.
Ahsan Iqbal said: "We must ensure that we do not take a decision for the sake of temporary public applause today that could turn into a major crisis for the country tomorrow." He also said Pakistan's current macroeconomic situation, which the government had managed with great difficulty, "cannot afford a repetition of the mistakes of the past".
Jamaat-e-Islami has been protesting the levy at a time of high global oil prices linked to the Middle East conflict, according to the Express Tribune and Minute Mirror. A party delegation met Prime Minister Shehbaz Sharif earlier in the week.
The government currently charges a petroleum levy of Rs80 per litre, a climate levy of Rs5 per litre and customs duty of Rs20.56 per litre, bringing taxes to nearly Rs106 per litre.
Petroleum Minister Ali Pervaiz told the National Assembly that "The petroleum levy collection is also part of the fiscal targets agreed under the IMF Extended Fund Facility". Rs4.4 trillion was collected from fiscal 2022-23 to 2025-26 against a target of Rs4.2 trillion, about Rs227 billion more.
Provisional collection last fiscal year was Rs1.567 trillion against a target of Rs1.468 trillion. The budget estimate for the current year is Rs1.676 trillion. The Express Tribune and Minute Mirror reported that in May the petroleum minister proposed an annual target of Rs1 trillion and a levy of Rs50 per litre, which the government did not adopt.
On supply, the National Assembly was told that petrol stocks on 22 September were about 395,000 tonnes, enough for about 22 days with total availability, and diesel stocks about 568,000 tonnes, about 30 days of cover. Rs66.5 billion in price differential claims remains outstanding to oil marketing companies, which have received Rs53.8 billion of Rs120.3 billion.
Why it matters
The levy is part of what motorists and transporters in Pakistan pay at the pump. Any change would come only from the next budget, after the committee reviews it.
