Government Talks Fail: Expect Nationwide Fuel Strike on July 5

The Pakistan Petroleum Dealers Association (PPDA) has announced a nationwide strike on July 5 after talks with the government failed over a turnover tax which the dealers consider unfair and unconstitutional. Over 13,000 petrol stations will be closed because of the strike. The government has set up a monitoring cell to manage the situation, but reversing the tax will need a legislative process.

PPDA chairman Abdul Sami Khan said,

They asked us to call off the strike and promised to resolve the issue, but we cannot postpone the strike on mere assurances.

He met with various government officials, including the finance minister, the Chairman of the Federal Board of Revenue, the Oil and Gas Regulatory Authority chief, the petroleum secretary, and representatives of the oil marketing companies’ advisory council. Despite these meetings, the dealers’ concerns were not addressed.

“There would be no more talks with the government till the ‘unfair’ turnover tax was withdrawn,” Mr Khan said. He noted that petrol stations would start running out of fuel on Thursday. He called double taxation cruel and unconstitutional.

Mr Khan announced that over 13,000 petrol stations will close from 6 am on July 5. The strike could continue until their demands are met and officially acknowledged. He urged retail outlet owners and operators to save their stocks for July 4.

In response, the Petroleum Ministry has set up a monitoring cell. This cell will oversee fuel supplies and coordinate with stakeholders during the strike. Representatives from oil marketing companies, the Oil and Gas Regulatory Authority, and the petroleum division have appointed focal persons for this cell.

The ministry also issued directives to oil marketing companies. They must ensure sufficient stocks of petroleum products at company-owned or operated sites. This is to avoid supply chain disruptions and inconvenience to the public and industry.

The dealers are protesting the turnover tax imposed in the recent budget. They argue they already pay an advance fixed withholding tax of Rs. 1.4 per liter (about 12% of dealer commission) as final income tax. The new 0.5% advance turnover tax results from a definitional issue of ‘dealers and distributors.’ This constitutes double taxation.

The Federal Board of Revenue chairman assured the dealers that the turnover tax would be withdrawn. However, this process is lengthy. The petroleum secretary explained that the tax was imposed through the Finance Act 2024-25. This act was passed by parliament and endorsed by the president. Reversing it requires a legislative process.