Government set to burden people with Rs1.676 trillion petroleum levy in FY2026-27
ISLAMABAD – The Pakistani government aims to collect a record Rs1.676 trillion through the petroleum levy in the upcoming fiscal year 2026-27, budget documents showed, a move likely to stoke public anger amid already high energy prices.
The target represents a 12% increase compared to the Rs1.498 trillion projected for the current fiscal year 2025-26, according to official budget papers presented to parliament.
The aggressive revenue target comes at a sensitive time for the South Asian nation. Citizens are already grappling with high inflation and volatile domestic fuel rates, driven primarily by ongoing geopolitical tensions in the Middle East that have disrupted global oil markets.
While Islamabad has repeatedly claimed it is attempting to cushion consumers from international price shocks, the budget figures tell a more demanding fiscal story. For the current fiscal year, the government revised its petroleum levy collections upward to generate an extra Rs30 billion, surpassing its initial target of Rs1.468 trillion.
Key Fiscal Insight: Unlike the General Sales Tax (GST), the petroleum levy is classified as non-tax revenue. This distinction allows the federal government to retain 100% of the collection in the central kitty without sharing it with the provinces under the National Finance Commission (NFC) award.
To maintain a delicate balancing act, the federal government has kept a sales tax exemption on petroleum products. However, economic analysts note that the strategy of substituting GST with a heavy petroleum levy shifts the financial burden directly onto end-consumers while starving provincial budgets of potential revenue shares.
The high levy target signals Islamabad’s tight fiscal constraints as it continues to navigate stringent revenue benchmarks set by international lenders to stabilize its economy.
