According to a report submitted by Ogra to the ECC, financial year 2015-16 was the worst for Pakistan’s oil consumers during which they paid the highest rate of sales tax on HSD purchase. PHOTO: FILE
ISLAMABAD: Prices of high-speed diesel (HSD) and petrol are likely to rise up to Rs2.24 per litre from the start of September in the wake of upward movement in international crude oil markets.
In a summary sent to the Ministry of Energy, the Oil and Gas Regulatory Authority (Ogra) on Wednesday recommended an increase in prices of petroleum products for September under the monthly revision. Decision on the recommendation will be taken on Thursday.
Petrol price cut by Rs1.2 per litre, diesel by Rs1.6
According to sources, Ogra proposed an increase of Rs2.24 per litre in the price of petrol (motor spirit), Rs0.70 for HSD, Rs15 for kerosene oil (superior) and Rs12 for light diesel oil.
If prices are revised upwards, the price of petrol will go up to Rs71.80 per litre from the current Rs69.56 whereas HSD will cost Rs78.10 per litre from the current Rs77.40.
The price of superior kerosene oil will go up to Rs59 per litre from the existing Rs44 and light diesel oil will be sold for Rs56 per litre compared to the existing Rs44.
Over the past couple of years, following a plunge in global crude prices, the government has burdened petroleum consumers with heavy taxes, especially on petrol and HSD, which are widely used in small and heavy vehicles as well as agriculture sector.
Among petroleum products, HSD consumption is the highest in the country.
The government has room to absorb the impact of price increase as it is still collecting heavy taxes on the sale of petroleum products. It receives over Rs25 billion in general sales tax on petroleum products and Rs10 billion in petroleum levy every month from the consumers.
Consumers in Pakistan have been paying up to 38% more on oil purchase compared with prices prevailing in the international market in order to make up for the shortfall in government revenues.
According to a report submitted by Ogra to the Economic Coordination Committee (ECC) of the cabinet, financial year 2015-16 was the worst for Pakistan’s oil consumers during which they paid the highest rate of sales tax on HSD purchase.
They paid up to Rs29.57 per litre in sales tax on HSD in 2015-16, in addition to Rs6 in petroleum levy, stated the report.
They also paid up to Rs15.22 per litre in sales tax on the purchase of petrol, Rs13.18 per litre on kerosene oil and Rs12.21 per litre on light diesel oil. These were the highest rates of sales tax imposed for a few months.
Understanding the misconception of Pakistan’s petrol prices
Following some recovery in global crude prices, the tax rate was slashed to Rs19.39 per litre on HSD in 2016-17 as the government tried to absorb some of the impact of the hike in crude prices.
In the year, the highest sales tax rate for petrol was Rs10.71 per litre, kerosene oil Rs2.83 per litre and light diesel oil Rs4.64 per litre.
In 2013-14, the maximum sales tax rates were Rs16.45, Rs16.96, Rs15.71 and Rs14.71 per litre for petrol, HSD, kerosene oil and light diesel oil respectively.
Published in The Express Tribune, August 31st, 2017.
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