The chief justice on Thursday expressed concern over the taxes being charged over petroleum products remarking that the huge difference between consumer price and price of imported oil was unjustifiable.
Hearing the suo motu case against the hike in petroleum prices, Chief Justice of Pakistan Mian Saqib Nisar sought an explanation from experts and neutral observers over the price increase.
“How can a product of such utility be possibly taxed? How were the prices increased to such an extent?” he questioned remarking that taxes should instead be imposed on those who have been exempted.
“The state is responsible for welfare of its people,” the CJP stated adding that if petroleum prices are hiking the government needs to adjust taxes rather than burdening the public.
During the hearing, the additional attorney general blamed the soaring dollar rates for the recent hikes.
To this Justice Aijazul Hasan remarked that taxes imposed on petrol alone totaled Rs30 per liter. “Prices of all other goods and services go north due to increase in petrol prices,” he maintained.
Justice Umar Ata Bandyal also observed that although indirect taxes were an easy source for revenue collection, the practice indicated failure of the tax department.
The additional attorney general maintained that the government should cut sales taxes during periods of high prices in international markets.
He suggested that all stakeholders should come together and submit recommendations which can assist the government in revising its policy.
A Federal Board of Revenue official argues that Pakistan imposed less sales tax compared to Germany and India.
Dismissing the comparisons, the chief justice said that it was Pakistanis who wanted relaxation; and cases for Germany and India were different.
Additional taxes and duties to an amount of Rs70 billion have been imposed for the month of July. Consumers would pay Rs37.63 per liter on petrol, Rs17.19 on light diesel, 22.93 on kerosene and 52.24 on high speed diesel. Good and Services Tax (GST) imposition on light diesel is Rs11.76 per liter, while Rs28.23 per liter is to be paid on high speed diesel and Rs17.46 on petrol.
Additional levy includes Rs10 per liter for petrol, Rs3 for light speed diesel, Rs6 for kerosene and Rs8 for high speed diesel. In addition, consumers will also be paying for the standard charges pertaining to dealer commission, oil-marketing companies profits and inland freight.