Govt contemplates increase in petrol price via sales tax

Islamabad: The caretaker government in Pakistan is contemplating further increases in petrol and diesel prices in the future, potentially by imposing a general sales tax on these fuels.

So far, the government has met its petroleum levy target, as stipulated in an agreement with the International Monetary Fund (IMF).

This agreement saw the imposition of a petroleum development levy of approximately Rs60 on petrol and Rs62 on diesel.

Under this agreement, the government has refrained from imposing a 25% sales tax on petroleum products, which would have led to additional price hikes for consumers.

However, if a future government deems it necessary to stabilize the country's financial situation, it may choose to shift a portion of the general sales tax onto fuel.

Since March 2022, the sales tax on petroleum products has been set at zero, but if the government decides to reintroduce this tax to cope with rising costs, fuel prices could see further increases.

The global rise in oil prices is expected to contribute to higher petroleum product prices at the end of September.

However, if the value of the dollar decreases significantly and the government refrains from implementing a general sales tax, it could provide some relief to the people of Pakistan from additional price shocks.