Karachi, July 31, 2024 – The Ministry of Finance announced on Wednesday that the government collected a staggering Rs 1.02 trillion as petroleum levy during the fiscal year 2023-24.
This remarkable figure represents a 76% increase from the Rs 580 billion collected in the preceding fiscal year.
The petroleum levy has emerged as the largest non-tax revenue source for the government, contributing significantly to the total non-tax revenue. For FY24, the total non-tax revenue was reported at Rs 3.05 trillion, a substantial growth of 78% compared to Rs 1.71 trillion in the previous fiscal year. The petroleum levy alone accounted for approximately 33.44% of this total, underscoring its critical role in the government’s revenue generation strategy.
In addition to the petroleum levy, the government also benefitted from significant non-tax revenue generated by the State Bank of Pakistan (SBP). The SBP’s profit surged to Rs 972 billion in FY24, a sharp increase from Rs 371 billion in the prior year. This substantial rise in SBP’s profit highlights the effectiveness of the government’s fiscal policies and its ability to leverage various revenue streams.
The robust increase in petroleum levy collection can be attributed to several factors. These include higher international oil prices, increased domestic consumption of petroleum products, and adjustments in levy rates by the government. The consistent rise in global oil prices has led to higher revenue from petroleum levies, benefiting the government’s fiscal position. Additionally, the government’s strategic adjustments to levy rates have maximized revenue without significantly impacting consumer prices.
Moreover, the government’s focus on enhancing the efficiency of revenue collection mechanisms and minimizing leakages has contributed to this impressive growth. Improved monitoring and enforcement measures have ensured that the full potential of the petroleum levy is realized, bolstering the government’s non-tax revenue.
The surge in non-tax revenue, particularly from the petroleum levy and SBP profits, provides the government with greater fiscal space to address economic challenges and invest in development projects. This revenue boost is expected to support key initiatives aimed at infrastructure development, social welfare programs, and economic stabilization.
As the government continues to navigate a complex economic landscape, the significant increase in non-tax revenue offers a cushion against fiscal pressures and external economic shocks. The reliance on diverse revenue sources, such as the petroleum levy and SBP profits, demonstrates a balanced approach to fiscal management, reducing dependency on traditional tax revenues and enhancing overall financial stability.