ISLAMABAD: Pakistan likely to impose tax on petroleum products to avert imminent shortfall in revenue collection.
Reports suggested that the Federal Board of Revenue (FBR) – the apex tax collecting agency of the country – is anticipating massive revenue shortfall in coming months due to no tax on petroleum products besides slowdown in economic activity.
Reportedly, the FBR may face about Rs500 billion as shortfall in the current fiscal year.
After the first quarter (July – September) 2022/2023, the FBR claimed to present extraordinary performance in revenue collection. “This performance in revenue collection is despite zero rating of Sales Tax on POL products, import compression and the prevailing situation of floods,” the FBR said in a press release.
Experts believed that the imposition of sales tax on petroleum products would increase the retail prices as well as result in high inflation.
At present the prices of petroleum products till November 30, 2022 are: price of petrol is Rs224.80 per liter; high speed diesel Rs235.30 per liter; kerosene oil Rs191.83; and light diesel oil Rs186.50 per liter.
In the latest review on November 15, 2022 the government decided to keep the prices unchanged for the fortnight ending November 30, 2022.
It was third straight announcement to keep the prices of petroleum products unchanged. Previously, on September 30, 2022 the government made changes in petroleum prices.
Experts said that the rise in petroleum prices were imminent in the next review as the government was under immense pressure from the IMF to impose sales tax on petroleum products.
At present the government adopted a policy to keep zero sales tax on petroleum products instead flat rate of 17 per cent. Furthermore, the government also committed to apply petroleum levy to generate more revenue for curtailing budget deficit.
Besides, the exchange rate is again showing a deterioration in rupee value against the dollar. The US dollar continued to make gain for seventh straight session against the Pakistani Rupee (PKR) on November 25, 2022 and reached PKR 223.94 in the interbank foreign exchange market.
The latest import data showed that the petroleum prices were on the higher sides as the country spent more money for import of lesser quantity of petroleum products.
The imports of petroleum products recorded a decline 1.75 per cent to $2.84 billion during July – October of fiscal year 2022/2023 as compared with $2.89 billion in the corresponding period of the last fiscal year.
However, import of petroleum crude recorded an increase of 6.61 per cent to $1.73 billion during the period under review as compared with $1.62 billion in the corresponding period of the last fiscal year.
Interestingly, quantities of both the segments fell 34.43 per cent and 23.26 per cent during the first four months of the current fiscal year, showing surge in prices of the international prices.
Although the present government has kept the prices during last three review under political pressure. But considering the present scenario of fiscal deficit and IMF pressure the government may take tough decision in coming days.