November 1, 2020:  The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has asked the government to slash the levies and taxes ratio on oil to support the industry and trade, as the government has been charging record high petroleum levy and the GST on petroleum products.

FPCCI President Mian Anjum Nisar observed that the petroleum levy has been kept on maximum higher side of almost Rs 30 per liter, putting an additional burden of billions of rupees on the consumers just to achieve revenue target at a time when POL prices are stable in the international market.

“The government increased the levy on petroleum products manifold to minimize its revenue losses instead of letting consumers benefit fully from the reduction in global oil prices during pandemic-hit economic slowdown,” he said. He said that by jacking up the ratio of taxes, duties and PLs, the government has deprived the consumers of relief from the plunge in global oil prices.

The FPCCI President said the trade and industry could have reaped the full benefits of the drop in global oil prices and the rates could have been reduced further if the government had not increased the levy, which was lifted by up to 300 percent in May this year to adjust the losses when government had announced the sizeable cut in petroleum prices. “This considerable reduction was withdrawn even before the end of the month but unprecedented hike in levies were not taken back, rather it was further raised in the coming months,” he added.

The highest levy raise of 300 percent was on kerosene oil, imposed in May 2020 when the government decreased its price to Rs 47.44 per litre but increased the levy by Rs 18.02 per litre from Rs 6 per litre earlier.

Mian Anjum Nisar said that the government increased Petroleum Levy by up to another Rs 7 per litre on Petroleum Products in Sept instead of providing the benefit of lowering international oil prices to the consumers and reducing the POL prices. He said that the government could have provided a relief of Rs 7 per litre to consumers, but it continued to keep the prices unchanged and instead increased the Petroleum levy. On petrol the Petroleum Levy was increased by Rs 6.29 to Rs 27.99 per litre. Similarly, Petroleum Levy on High Speed Diesel was increased by Rs 7 per litre from Rs 21 to Rs 29.95 per litre and E-10 Gasoline by Rs 5 per litre to Rs 26.44.

He said that during the tenure of the previous government, the petroleum levy was charged in the range of Rs 3-10 per litre, however, GST was higher than the current rate. As GST is shared with the provinces, the federal government has slashed the sales tax but lifted the petroleum levy in a bid to collect more revenue.

He said that at a time when country’s GDP ratio was further stretched owing to nominal exports growth owing to high cost of doing business, the businesses need maximum relief.

He said that Pakistan's economy is going through a challenging time due to the outbreak of Covid-19 pandemic. With a view to improve the cash flow of businesses at this crisis like situation, the authorities would have to support the economy through decline in taxes ratio on all items including the POL products.

He observed that the government has already enhanced the general sales tax on all petroleum products to a standard rate of 17 percent across the board to generate additional revenues. Earlier, the government was charging 0.5 percent GST on light diesel, 2 percent on kerosene, 8 percent on petrol and 13 percent on HSD.

He suggested that business-friendly policies must be adopted as other neighboring countries of the region are giving to trade and industry. He said that sizeable cut in oil rates would certainly bring down the cost of doing business and our products would get their due share in the global market.

He called upon the government to address the key issues of trade and industry, facilitate the economic growth along with improving tax revenue of the government. He said that the impact of COVID-19 has badly affected business and industrial sector, stressing the government to bring down GST in order to ease the difficulties of businesses. He said that the move would reduce the cost of doing business, attract new investment, promote industrialization and create new jobs.

Press Release

37764