Pakistan has agreed to collect Rs. 920 billion in petroleum levy this fiscal year as part of its many commitments with the International Monetary Fund (IMF).
The government guaranteed the lender at last week’s review tasks that it would enhance the petroleum levy yearly target of Rs. 869 billion by another Rs. 50 billion. They agreed that the increased levy collection would compensate for the loss of revenue from other non-tax revenue streams, reported Express Tribune.
Notably, the government levies a Rs. 60 per liter levy on each liter of petrol and diesel. It had allocated Rs. 869 billion for this category in the budget but has now committed to raising it to the tune of Rs. 920 billion.
Since 2022, the petroleum levy has become the authorities’ single largest source of revenue collection. Now, it has been indicated that petroleum usage has declined less than predicted, hence the annual collection will be higher than the budgeted figure of Rs. 869 billion.
Even if the levy exceeded expectations, the government has chosen not to cut fuel prices, which remain around historically high levels despite persistently high levels of inflation.
While the government has committed to the enhanced levy collection, revenue collection from Gas Infrastructure Development Cess (GIDC) has been reduced by Rs. 10 billion to Rs. 30 billion. As of December 2018, companies under the GIDC category collected Rs. 416 billion, which they did not deposit in the national kitty.
Only Rs. 80 billion out of Rs. 416 billion has been collected since 2019. There was still Rs. 337 billion owed, of which Rs. 40 billion was previously projected to be retrieved. However, this objective has been cut by Rs. 10 billion.
Meanwhile, the target for non-tax revenues has now been reduced by Rs. 97 billion from earlier expectations of Rs. 2.1 trillion despite the increase in levy collection.