Karachi, July 21, 2024 – The Pakistani government has unveiled a comprehensive strategy for the collection of petroleum levy, a crucial non-tax revenue source, with ambitious targets set through the fiscal year 2026-27.
This initiative is part of the broader Medium Term Strategy Paper (MTSB) for FY25 to FY27, which outlines the government’s fiscal plans and revenue enhancement measures.
The government aims to increase the petroleum levy to Rs 1.45 trillion by FY27, up from the projected Rs 1.28 trillion in the current fiscal year 2024-25. This substantial increase highlights the government’s commitment to bolstering its non-tax revenue streams, which are essential for funding public services and infrastructure projects without increasing the tax burden on citizens.
Non-Tax Revenue Overview
Non-tax revenue (NTR) of the Federal Government includes various sources such as surplus profits of regulatory bodies, dividends, mark-ups, and other receipts. To streamline the collection of these revenues, the government has enacted special provisions in the Public Finance Management Act, 2019. The objective is to enhance revenue from these sources through efficient recovery and rationalization of rates where possible.
The government’s strategy emphasizes the importance of diversifying and maximizing non-tax revenue. The petroleum levy is expected to play a pivotal role in this effort. Additionally, other significant non-tax revenue sources include the Natural Gas Development Surcharge, Gas Infrastructure Development Cess (GIDC), petroleum levy on LPG, and receipts from civil administration and ICT administration.
Projected Non-Tax Revenues
For the fiscal year 2024-25, the government has projected a total non-tax revenue of Rs 3.587 trillion. This figure is expected to rise to Rs 3.851 trillion in FY26 and reach Rs 4.093 trillion by FY27. Key components of this revenue include:
• Petroleum Development Levy (PDL): The cornerstone of the non-tax revenue strategy, with projections set to increase from Rs 1.28 trillion in FY25 to Rs 1.45 trillion by FY27.
• Natural Gas Development Surcharge: Expected to rise modestly from Rs 25.6 billion in FY25 to Rs 30 billion in FY27.
• Gas Infrastructure Development Cess (GIDC): Anticipated to grow from Rs 2.5 billion in FY25 to Rs 5 billion in FY27.
• Petroleum Levy on LPG: Projected to increase from Rs 3.5 billion in FY25 to Rs 5.5 billion by FY27.
• Receipts from Civil Administration and Other Functions/ICT Administration: Estimated to grow from Rs 50.7 billion in FY25 to Rs 66.5 billion in FY27.
• State Bank of Pakistan (SBP) Profit: Expected to rise significantly from Rs 1.242 trillion in FY25 to Rs 1.569 trillion by FY27.
• Pakistan Telecommunication Authority (PTA): Projected to increase its contributions from Rs 33.8 billion in FY25 to Rs 55 billion by FY27.
• Royalties on Oil, Gas, and Windfall Levy Against Crude Oil: Expected to grow from Rs 190.5 billion in FY25 to Rs 221.6 billion by FY27.
• Markup (Provinces, PSEs, and Others): Anticipated to decrease from Rs 294.3 billion in FY25 to Rs 217.3 billion in FY27.
• Other Non-Tax Revenue: Expected to grow from Rs 463.5 billion in FY25 to Rs 485.1 billion by FY27.
The government’s plan to enhance non-tax revenue, particularly through the petroleum levy, is a critical component of its broader fiscal strategy. By focusing on efficient recovery and rationalization of rates, the government aims to ensure sustainable revenue growth, reduce reliance on tax-based income, and provide the necessary funds for national development projects.
In conclusion, the outlined strategy demonstrates the government’s proactive approach to fiscal management and revenue generation, aiming for a balanced and sustainable economic future for Pakistan.