The federal government is contemplating the imposition of a sales tax on petroleum products to generate additional tax revenue from consumers. According to sources, key figures within the government’s economic team have instructed the Federal Board of Revenue (FBR) to draft proposals for this potential tax.
If approved, the imposition of a sales tax could prevent the anticipated reduction in petroleum prices set to take effect on August 1, 2024. The Oil & Gas Regulatory Authority (OGRA) has recommended that the government reduce diesel prices by Rs. 10 per liter and petrol prices by Rs. 5.50 per liter, aligning with current trends in the international market.
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It’s important to note that the government has already implemented a petroleum development levy on these products. The recent budget included a parliamentary approval to gradually increase the Petroleum Development Levy (PDL) on petroleum products from Rs. 60 per liter to Rs. 70 per liter. This proposed sales tax would further increase the cost burden on consumers, potentially impacting the overall pricing strategy for petroleum products.
