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Government raises sales tax on petroleum products to increase revenue collection

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The government decided to keep petroleum product prices unchanged for the month of May by raising the sales tax on petroleum products with the aim of increasing revenue collection.

The revenue collection has fallen short of target and the government has no alternative but to increase sales tax on the petroleum products. The sales tax on motor gasoline has been raised to 20 percent for May from 15.5 percent for the month of April, while on high speed diesel it has been increased to 33.5 percent from 29.5 percent. However, the sales tax rate on kerosene and light diesel pegged at zero percent. If we compared from the start of calendar year or January 2017 the sales on motor gasoline has been raised by 5.5 percent and high speed diesel by 8 percent.
According to analysis it is surprising to see that from December 2016 to date the crude oil price has fallen sharply.

Brent crude down by almost $5 to $51.8 per barrel, while WTI declined by $5.4 to $49.4 per barrel. But in the country the proportion of sales tax has been raised and also the price of motor gasoline and high speed diesel has been raised by 11 percent and 10 percent to Rs 74 and Rs 83 per liter respectively. The main aim to raise the sales tax has been to cover up the shortfall heralded in the revenue collection.

  May 2017 Dec 2016
Motor gasoline Rs 74/ltr   Rs 66.27/ltr
Sales tax  20 percent 14.5 percent
High speed diesel Rs 83/ltr  Rs 75.22/ltr
Sales tax 33.5 percent 25.5 percent
Brent Crude $51.8/bbl $56.8/bbl
WTI $49.4/bbl $54.8/bbl


Posted on: 2017-05-02T10:39:00+05:00