ISLAMABAD – September 14, 2024 – As international oil prices continue their downward trend, the Pakistani government is preparing to implement a significant reduction in fuel prices for the second half of September 2024.
This move is expected to bring relief to consumers across the country, although it may be partially offset by a proposed tax hike aimed at addressing a growing revenue shortfall.
Expected Fuel Price Reductions
According to sources, petrol prices are set to decrease by Rs11 per litre, while high-speed diesel (HSD) could see a reduction of Rs11.5 per litre. This adjustment is scheduled to take effect from September 16, 2024. If the government refrains from raising the petroleum levy, consumers could benefit from these substantial price cuts. The anticipated new prices would see petrol at approximately Rs247.60 per litre and HSD at Rs251.75 per litre for the period from September 16 to September 30, 2024.
Potential Tax Hike
Despite the potential for lower fuel prices, the government is considering a tax hike to address a significant revenue shortfall. The Federal Board of Revenue (FBR) is proposing a one percent increase in all withholding tax rates, effective October 1, 2024, if the revenue gap persists. This proposal comes as a response to the FBR’s revenue shortfall of Rs98 billion during July and August 2024, largely due to missed targets in various tax categories.
Revenue Shortfall and Government Response
The FBR has struggled to meet its revenue targets, prompting discussions about increasing the petroleum levy to help bridge the gap. However, the government faces challenges due to the declining trend in petroleum sales and consumption within the country, which could complicate efforts to raise the levy.
Impact on Consumers
If the government decides to proceed with the proposed tax hike, the reduction in fuel prices may be less pronounced, potentially limited to Rs5-6 per litre. Despite this, the overall trend of decreasing international oil prices is expected to provide some financial relief to consumers.
The anticipated price adjustments reflect the global oil market’s ongoing fluctuations and the Pakistani government’s effort to balance fiscal needs with public relief. The final decision on the petroleum levy and tax rate adjustments will be crucial in determining the extent of the price reduction for consumers.
