ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved an increase in petroleum levy (PL) from Rs30 to Rs50 per litre on RON 95 and above with effect from 16th November 2022. The meeting of the ECC presided over by Finance Minister Ishaq Dar approved the increase in PL on HOBC on a summary moved by the Federal Board of Revenue (FBR) on Thursday.
The FBR in the summary stated that the rates of sales tax on POL products were reduced to zero from the 1st February 2022, which put pressure on the FBR’s efforts to achieve its revenue targets.
The meeting was further informed that the petroleum sector is one of the major contributors to revenue and distortion in its tariff regime puts tremendous pressure on the FBR’s efforts to achieve its revenue targets besides it has also been agreed with the International Monetary Fund (IMF) in the 7th and 8th review that the government will undertake contingency measures to keep revenue collection on target.
Increasing the rate of GST on fuel as prelude to reaching the standard rate of 17 per cent is one of such contingency measures.
However, to shield the general public from inflationary impact of across-the-board increase in GST on all POL products, it is proposed that sales tax rate may be enhanced from 0 per cent to 17 per cent on high octane blending component (HOBC) and RON 97 only.
The meeting was informed that the revenue impact of this proposal for the remaining part of the current financial year (eight months) is estimated at Rs6 billion.
The ECC after deliberation allowed to increase petroleum levy from Rs30 up to Rs50/ litre on RON 95 and above with effect from 16th November 2022, which is a luxury good being consumed by wealthy consumers in expensive vehicles.
On a summary moved by the Ministry of Energy (Petroleum Division), the meeting allowed premium on HSD after it was informed that due to the difference of premium on import of HSD for importing OMCs and PSO, there is an unsustainable position for importing OMCs and smooth supply of HSD in the country.
In order to ensure sustained supply/ import security, the ECC after a detailed discussion allowed premium on HSD subject to maximum capping at US$ 15/BBL for importing OMCs other than PSO for the months of November and December 2022.
The ECC also approved technical supplementary grants of Rs5 billion for the conduct of the 7th population census in the country.
The meeting was attended by the Federal Minister of Planning, Development and Special Initiatives Ahsan Iqbal, Federal Minister for Power Khurram Dastgir Khan, MNA/ex-PM Shahid Khaqan Abbasi, Minister of State for Finance and Revenue Dr Aisha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, SAPM on Finance Tariq Bajwa and SAPM on Revenue Tariq Pasha. Federal secretaries, chairman FBR, and other senior officers also attended the meeting.
Copyright Business Recorder, 2022