Govt likely to set Rs110b petroleum levy target
Tax rate will have to be increased to meet the target.
ISLAMABAD:
The government is likely to set the petroleum levy target at Rs110 billion in the budget for financial year 2011-12.
Sources told The Express Tribune that the petroleum ministry was projecting collection of Rs104 billion as petroleum levy in the next financial year starting July, but the finance ministry wanted the figure to be set at Rs110 billion.
The government had also set the same Rs110 billion target for the outgoing financial year 2010-11. However, following a sharp rise in oil prices in the world market, the government was compelled to reduce the levy to provide some relief to the consumers in order to avoid people’s ire.
“So far, Rs60 billion has been collected as petroleum levy, which is sharply lower than the target,” an official said, adding Rs45 billion had been given in subsidy to the consumers to absorb the impact of high global oil prices during recent months. The government is giving Rs9 billion per month in subsidy.
The international oil market has risen in the wake of persistent political instability in the Middle East and North Africa region and world economic recovery hopes.
Sources said the government would have to increase the rate of petroleum levy to achieve the target next year.
In the 2010-11 budget, petroleum levy on petrol was fixed at Rs10 per litre, High Octane Blending Component (HOBC) at Rs14 per litre, kerosene oil at Rs6 per litre and Light Diesel Oil (LDO) at Rs3 per litre. Later, the levy on petrol was reduced to Rs3.16 per litre and on HOBC to Rs6.13 per litre. The levy on kerosene oil and light diesel oil was removed.
In December 2010, when global oil prices increased, the government kept rates unchanged by reducing the levy, resulting in a revenue loss of Rs2 billion. In January, though oil prices were increased but after a week the decision was withdrawn due to political pressure, leading to a further revenue loss of Rs5 billion on account of petroleum levy.
In the first half of 2010-11, Rs107 billion was collected on account of petroleum levy and general sales tax on petroleum products.
Published in The Express Tribune, May 13th, 2011.
The government is likely to set the petroleum levy target at Rs110 billion in the budget for financial year 2011-12.
Sources told The Express Tribune that the petroleum ministry was projecting collection of Rs104 billion as petroleum levy in the next financial year starting July, but the finance ministry wanted the figure to be set at Rs110 billion.
The government had also set the same Rs110 billion target for the outgoing financial year 2010-11. However, following a sharp rise in oil prices in the world market, the government was compelled to reduce the levy to provide some relief to the consumers in order to avoid people’s ire.
“So far, Rs60 billion has been collected as petroleum levy, which is sharply lower than the target,” an official said, adding Rs45 billion had been given in subsidy to the consumers to absorb the impact of high global oil prices during recent months. The government is giving Rs9 billion per month in subsidy.
The international oil market has risen in the wake of persistent political instability in the Middle East and North Africa region and world economic recovery hopes.
Sources said the government would have to increase the rate of petroleum levy to achieve the target next year.
In the 2010-11 budget, petroleum levy on petrol was fixed at Rs10 per litre, High Octane Blending Component (HOBC) at Rs14 per litre, kerosene oil at Rs6 per litre and Light Diesel Oil (LDO) at Rs3 per litre. Later, the levy on petrol was reduced to Rs3.16 per litre and on HOBC to Rs6.13 per litre. The levy on kerosene oil and light diesel oil was removed.
In December 2010, when global oil prices increased, the government kept rates unchanged by reducing the levy, resulting in a revenue loss of Rs2 billion. In January, though oil prices were increased but after a week the decision was withdrawn due to political pressure, leading to a further revenue loss of Rs5 billion on account of petroleum levy.
In the first half of 2010-11, Rs107 billion was collected on account of petroleum levy and general sales tax on petroleum products.
Published in The Express Tribune, May 13th, 2011.