KARACHI: After the International Monetary Fund (IMF) proposed a carbon tax, the price of petrol is likely to go up by Rs 20 to 30 per litre, while, the further raise in the general sales tax could take petrol prices up to Rs 300 per litre.
According to a private television channel Friday, one hand, the Pakistan Stock Exchange (PSX) is experiencing record highs due to rapid negotiations with the IMF, fastest privatization of PIA and improvements in banking investment and improvement of affairs with the IMF.
In TV channel programme, it was discussed that the IMF has also said that for the country’s needs, new power plants should be operated first and complete production capacity should be created because it can reduce capital charges by 18 percent.
At present, due to not buying complete electricity from new power plants, an annual burden of Rs 2,000 billion comes directly on the public.
The IMF has advised the federal government to impose carbon tax on petroleum products instead of increasing general sales tax by 18 percent in the next budget. If this is done, not only the demand for civilian oil will decrease, but also the burden from provincial share in taxes will decrease.
As per report, the government has decided to take the option of imposing 20 to 30 percent carbon tax in the next budget. At present, Rs 60 per liter is charged in petroleum development levy, if this proposal is approved, Rs 20 to 30 carbon levy will be imposed per liter.
Referring to the conditions of the IMF, the report stated that the real problem is the lack of funds with the government and if the general sales tax is imposed, it becomes part of the FBR and if the government imposes the Petroleum Development Levy, then it does not become part of the FBR and all the money goes to the federal government.
As per report, at present, levy of Rs 60 per liter is being collected on petrol and diesel, which the federal government is collecting. Now the proposal for carbon tax has also come to light, if 18 percent sales tax is imposed on petrol, then 57.5 percent will be given to the provinces.
The report said that the proposal to impose carbon tax has been made to increase federal revenue and if carbon tax is levied, all funds will be given to the federal government and the federal government can reduce its losses to some extent. – NNI