Pakistan has committed to the International Monetary Fund (IMF) to ramp up petroleum levy collection by an additional Rs 920 billion this fiscal year. The Finance Ministry sources highlighted that in recent discussions, the government assured the IMF of surpassing the initial annual petroleum levy goal of Rs 869 billion by an extra Rs 50 billion.
The government plans to make up for the shortfall from other non-tax revenue sources through increased levy collection. Presently, there’s a petroleum tax of Rs 60 per liter on petrol and diesel, with a budgeted collection of Rs 869 billion. However, the commitment now stands at Rs 920 billion.
Petroleum levy stands as the primary source of tax revenue for authorities. In the initial quarter, the government collected Rs 222 billion in petroleum levy, marking a staggering 367 percent increase from the same quarter last year.
The Finance Ministry spokesperson, Qamar Abbasi, stated that the government hasn’t made promises concerning the petroleum levy. They clarified that the IMF might raise the petroleum levy rate, maintaining it at Rs 60 per liter. Lower-than-anticipated petroleum product consumption led to annual receipts surpassing the Rs 869 billion budget.
Regarding the General Sales Tax on Gas Infrastructure Development Cess (GIDC), reductions have been made from Rs 40 billion to Rs 30 billion. However, companies had amassed Rs 416 billion by December 2018. In 2019, a presidential ordinance aimed to waive half of this amount, but due to public backlash, the government retracted the ordinance and opted to resolve the Rs 416.3 billion in arrears through legal means.
Up to now, only Rs 80 billion out of Rs 416 billion has been collected since 2019, leaving outstanding arrears of approximately Rs 337 billion. Earlier targets of recovering Rs 40 billion have been revised, with the current shortfall standing at Rs 10 billion. In 2019, fertilizer companies owed around 138 billion rupees.
Textile sector liabilities totaled 42.5 billion rupees, and captive power plants had Rs 91.4 billion in liabilities in 2019. The CNG sector owed Rs 80 billion. Legal complications have hampered the recovery of GIDC arrears, affecting their retrieval.
Contrary to initial estimates, the non-tax revenue target of Rs 2.1 trillion has been reduced by Rs 97 billion despite the increased petroleum levy collection.
