February 16, 2023 (MLN): Pakistani consumers have been hit with a sharp rise in energy prices mainly due to the government's effort to comply with the conditions of IMF to unlock the stalled tranche.
Meanwhile, the value of the Pakistani rupee (PKR) has depreciated by almost 13% against the dollar since January 25, 2023, reaching an all-time low of Rs.276.58 on February 3rd. This, in turn, also led to a surge in prices.
This sharp devaluation is one of the major factors behind the rise in petroleum product prices. During the two-week period, crude oil prices initially fell but then reversed, registering a gain of 3%.
Meanwhile, sales tax remained at zero, and petroleum development levy (PDL) on petrol and diesel remained unchanged at Rs50 and Rs40 per liter, respectively.
Despite the PDL remaining the same, the price of diesel went up by Rs13.09 per liter, while petrol saw an increase of Rs28.11 per liter. This significant hike in fuel prices has left many Pakistani consumers feeling the pinch in their pockets.
Exacerbating the already mounting inflationary pressure, the Oil and Gas Regulatory Authority (OGRA) on Wednesday notified a massive surge in prices by up to 112.3% for domestic users.
On the same day, Finance Minister Ishaq Dar while presenting the Finance Bill in National Assembly announced several proposed amendments, including an increase in federal excise duty on cigarettes and fizzy drinks, and an increase in federal excise duty on cement from Rs1.5/kg to Rs2/kg. The General Sales Tax (GST) is also increased from 17% to 18%.
As per the Finance Bill, the government has increased the sales tax on luxury items to 25% from 17%. This hike in tax rates is expected to generate revenue for the government and curb the purchase of non-essential items.
The tax on air travel has also been increased to Rs 50,000 or 20%. This decision has been made to promote domestic tourism and discourage unnecessary foreign travel amidst the ongoing pandemic.
Moreover, wedding halls will now be subject to a withholding tax of 10%. This tax is expected to bring more businesses under the tax net and increase government revenue.
Additionally, the sales tax on cell phones costing $500 has been increased to 25% from 17%. This move is aimed at discouraging the import of expensive cell phones and promoting local manufacturing.
In the end, it will be the ordinary consumer who will have to bear the brunt of the proposed IMF tranche, even though it has not been finalized yet.
Copyright Mettis Link News
Posted on: 2023-02-16T12:55:09+05:00
