Rs 107 billion PL, GST collected in July-December period

The government has collected Rs 107 billion revenue on account of Petroleum Levy (PL) and general sales tax (GST) on petroleum products during first half (July-December) of ongoing financial year 2010-11. According to break-up, the government collected Rs 47 billion PL and Rs 60 billion GST on petroleum products.
The annual budgetary target for collection under this head is Rs 250 billion, and includes petroleum levy and general sales tax in the domestic market and at import stage. During December 2010, the government kept oil prices unchanged by adjusting the Petroleum Levy despite rising trend in global oil prices following intelligence reports that any hike in prices might compel masses to come on the roads to register their protest resulting in a revenue loss of Rs 2 billion.
However, the government raised oil prices in January, but after a week, it was forced to withdraw the decision due to political pressure resulting in a further revenue loss of Rs 5 billion on account of PL collection. In total, the revenue loss for December-January has been Rs 7 billion on account of PL.
The government fixed rate of Petroleum Levy as follows: petrol Rs 10 per litre, HOBC Rs 14 per litre and kerosene oil Rs 6 per litre that was reduced to Rs 4.27 per litre, Rs 7.43 per litre and Rs 2.55 per litre respectively after withdrawal of oil price hike. The government was charging Rs 3 per litre PL on light diesel oil (LDO) that has been abolished and is currently charging Rs 10.60 per litre GST on petrol, Rs 12.59 per litre on HOBC, Rs 10.31 per litre on kerosene oil and Rs 9.68 per litre GST on LDO.
The government will also be facing political pressure to keep oil prices unchanged in the remaining months of the ongoing financial year 2010-11.The budget deficit may swell by 0. 2 percent if the government absorbs the rising impact of global oil prices. The 0.2 percent rise for the remaining six months of the current fiscal year (January-June 2011) is based on the earlier estimates of a 4.7 percent budget deficit for 2010-11, as agreed with the International Monetary Fund (IMF). The revised estimate of the budget deficit, as per sources in the Finance Ministry, is expected to be around 7.5 percent. The government may face revenue loss of over Rs 40 billion in a bid to keep oil prices unchanged during the remaining six months of the current financial year.
Due to Musharraf government''s decision to keep oil prices unchanged, the government was compelled to pay Rs 297 billion subsidy on petroleum products, resulting in circular debt that is still to be resolved, an official said, adding that now the Finance Ministry is also injecting money into the energy sector to clear the circular debt. The government claims that it has no fiscal space to provide subsidy on oil prices. But analysts argue that the government should slash current expenditure rather than placing cut in development budget to provide relief to consumers on petroleum products. After coming into power, almost all ministers and secretaries spent huge amounts of public money on renovation of their offices, a practice indicative of profligacy, sources added.