Pakistan - Consumers paying Rs3-4 extra on petrol, diesel: report

The recent imposition of 5 per cent additional sales tax on petroleum products is putting an extra burden on consumers, who are paying Rs3 to Rs4 extra for one litre of petrol.

The government is expected to earn Rs17 billion more from this additional levy introduced on Jan 1, but it may result in some sort of increase in prices of other commodities.

The Federal Board of Revenue (FBR) is collecting extra Rs3.21 per litre on petrol, Rs3.53 on high-speed diesel, Rs2.76 on light diesel, Rs2.95 on kerosene and Rs3.77 on High Octane Blending Component (HOBC).

These figures were disclosed by top officials of the FBR during a meeting of the Senate Standing Committee on Finance the other day.

Federal Finance Minister Ishaq Dar and the finance secretary were not present at the meeting.

FBR Chairman Tariq Bajwa argued in support of the increase in the sales tax, and stated that the department had powers to increase the tax rates without seeking parliament’s approval.

Senators Sughra Imam and Osman Saifullah Khan questioned the imposition of additional sales tax through SROs, and said they would challenge the decision in court.

They also questioned the role of OGRA in determining domestic oil prices, and requested for a special meeting to oversee the functioning of the authority.

Sardar Fateh Mohammad pointed towards some illegalities committed by the OGRA. However, OGRA Chairman Saeed Ahmad Khan stated that no illegal decisions had been taken by the authority.

At one point, FBR Chairman Tariq Bajwa claimed that the exchequer would face a loss of Rs68 billion because of oil price variations.

Similarly, he said that the government would have a net saving of $3.5bn (Rs350bn) on oil imports. On this disclosure, senators sought abolition of 5pc GST. But the FBR chairman’s tone was non-committal.

Senator Sughra Imam and Osman Saifuallah suggested for an overview from the finance ministry to see the actual benefits of oil prices to economy. The government should explain the real benefits of falling international oil prices, they said.