Pakistan Eyes Over 33% Jump in FY25 Petroleum Levy Collection

Pakistan Eyes Over 33% Jump in FY25 Petroleum Levy Collection

Islamabad, June 16, 2024 – Pakistan is bracing for a significant rise in its petroleum levy collection in the upcoming fiscal year, with projections exceeding 33% growth.

As per budget documents released by the Ministry of Finance, the government aims to collect a staggering Rs 1,281 trillion through the levy in FY 2024-25, compared to the Rs 960 billion projected for the current year.

The petroleum levy serves as a crucial source of non-tax revenue for Pakistan. Unlike the sales tax, which is shared with provinces, the federal government retains full control over petroleum levy collections. This underscores its significant role in the federal revenue structure.

The reliance on this source of income is evident in the upward revision of the levy collection target for the outgoing fiscal year. Initially projected at Rs 869 billion, the target was raised to Rs 960 billion, reflecting an increased burden on fuel prices.

For FY 2024-25, the budget proposes further tightening the belt. Budget documents reveal an increase in the maximum levy rate from Rs 60 per liter to Rs 80 per liter. This hike aligns with the government’s strategy to enhance revenue while maintaining a balanced approach to fuel pricing.

The levy on high-speed diesel oil, a widely used fuel, will see a maximum increase to Rs 80 per liter, with a minimum rate of Rs 60 per liter. Similarly, the levy on petrol will mirror this structure, with a maximum of Rs 80 and a minimum of Rs 60 per liter. This standardization aims to generate a more consistent revenue stream from the petroleum sector.

Recognizing the importance of affordability, the government has set the levy on kerosene oil, a vital fuel for many households, at Rs 50 per liter. Light diesel oil, used in specific sectors, will have a maximum levy of Rs 75 per liter with a minimum of Rs 50 per liter. This reflects an attempt to align taxation with fuel types and consumption patterns.

The substantial increase in the petroleum levy is a clear indicator of the government’s plan to leverage this revenue stream for fiscal consolidation. As the new fiscal year draws near, all eyes will be on how these changes impact the economy and the general public.