Pakistan’s Upcoming Budget to Increase Petroleum Levy, Senator Warns
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By Anya Sharma | ISLAMABAD – 2025/05/28 19:23:48
Pakistan’s citizens may face increased financial strain as the upcoming budget is expected to raise the petroleum levy, according to Senator Saleem Mandviwalla, chairman of the Senate standing committee on finance and revenue and former finance minister.He voiced his concerns on Tuesday, highlighting the potential burden on the public.
Senator Mandviwalla also criticized the performance of the Federal Board of Revenue (FBR), particularly regarding the Tajir Dost Scheme (TDS). The TDS aimed to collect taxes from shopkeepers based on the fair market value of their stores and sales, with rates ranging from Rs100 to Rs60,000 per month. This initiative was designed to integrate traders and wholesalers into the formal tax structure, meeting requirements set by the International Monetary Fund (IMF).
Responding to questions about the FBR’s inability to raise Rs5.6 million under the TDS, Senator Mandviwalla stated that the FBR had not effectively expanded the tax net. He was speaking on the Dawnnewswstv show ‘Doosra rukh’.
“Every year we hear the FBR will be reformed but it doesn’t happen.”
Senator Mandviwalla also critiqued the FBR’s outdated “1960’s system” and stressed the importance of incorporating officers who can leverage technology to enhance the taxation system,citing Turkey and India as examples.
Petroleum Levy Increase to Offset revenue Shortfall
Senator Mandviwalla confirmed that the upcoming budget would be a “standard-type budget” that would likely burden the public. “I have no expectation of relief from the budget,” he stated.
“Levy will be applied, public will pay for it and this is how budget’s deficit will be will be overcome.”
The chief of the Senate standing committee on finance indicated that the petroleum levy would be increased to compensate for a revenue shortfall of Rs700 billion.
Last year, the federal government aimed to collect Rs1.28 trillion through the petroleum levy in the fiscal year 2024-25, a 47.4 per cent increase over the previous year’s target.
Government’s Commitment to Maintain Petroleum prices
In June, the government decided to maintain petroleum prices above Rs80 to prevent increased demand, reduce carbon emissions, and manage foreign exchange costs. Additionally, the government committed to the IMF to impose a carbon levy of approximately Rs5 per liter, effective from July 1, as part of the $1.3 billion Resilience and Sustainability facility.
Frequently Asked Questions
What is a petroleum levy, and why is it being increased?
A petroleum levy is a tax on petroleum products. it is being increased to offset a revenue shortfall of Rs700 billion and to meet fiscal targets set by the IMF.
What is the Tajir Dost Scheme (TDS), and why is it crucial?
the TDS aims to bring traders and wholesalers into the formal tax structure. It is indeed critically important for broadening the tax base and increasing government revenue.
How will the carbon levy impact consumers?
The carbon levy of Rs5 per liter will likely increase the price of petroleum products, adding to the financial burden on consumers.
