Institute of Cost and Management Accountants of Pakistan (ICMAP) has proposed the introduction of a Carbon and Pollution Levy on large industrial units as part of its tax recommendations for the Federal Budget 2026–27.
In its proposals submitted to the Ministry of Finance, ICMAP suggested a Progressive Carbon and Pollution Levy (PCPL) aimed at addressing the environmental and economic costs of industrial pollution. The institute noted that pollution from large-scale industries continues to burden public health, infrastructure, and overall productivity, costs that are currently not reflected in Pakistan’s tax system.
Under the proposed framework, the levy would be calculated based on facility-level emissions and pollutant intensity. Industries with higher emissions would be required to pay proportionately more, encouraging companies to adopt cleaner and more efficient production methods.
ICMAP emphasized that revenue generated from the levy should be allocated toward environmental protection initiatives, pollution control measures, and public health programs. The proposal also aligns with Pakistan’s international climate commitments and aims to support sustainable industrial growth.
The institute highlighted several key benefits of the measure, including promoting low-carbon technologies, improving air quality, and incentivizing innovation in industrial practices. It estimated that the levy could help reduce emissions by 10 to 20 percent in high-polluting sectors.
Additionally, the proposed tax is expected to create a stable revenue stream for environmental programs while encouraging industries to comply with global environmental standards and adopt best practices.