Pakistan Raises Petroleum Levy Target Amid Fiscal Challenges

Pakistan Increases Petroleum Levy Target

Pakistan's government has set a new petroleum levy target of PKR 920 billion for the current fiscal year, marking an increase of 50 billion. This decision aims to address a shortfall in non-tax revenue and challenges in collecting the Fuel Infrastructure Development Cess (GIDC).

Current Petroleum Tax Rates and Inflation

Despite a significant increase in petroleum levy collections, totaling PKR 222 billion in the first quarter, authorities have decided to maintain the current fuel prices. The petroleum tax rate remains at PKR 60 per liter, reflecting the ongoing inflationary pressures that deter price reductions.

Adjustments in GIDC Revenue Goals

The government has revised its GIDC revenue target, reducing it by PKR 10 billion to PKR 30 billion. Following the Supreme Court's annulment of the GIDC statute and subsequent legal complications, the collection stands at PKR 80 billion, leaving an outstanding amount of PKR 337 billion.

Federal Board of Revenue's Tax Strategy

The Federal Board of Revenue (FBR) has kept its overall tax revenue target at PKR 9.415 trillion for the fiscal year, while modifying individual tax targets due to the effects of import compression. Income tax goals have been increased by PKR 346 billion. However, the projections for sales tax, customs duties, and federal excise duty have been collectively decreased by PKR 347 billion. The FBR plans to offset reduced import revenues by intensifying domestic taxation efforts.

Roshan Digital Account and International Investment

Despite domestic fiscal adjustments, Pakistan's Roshan Digital Account has attracted significant external financial interest with an inflow of $6.9 billion in October. This indicates sustained international investment interest, contributing positively to Pakistan's economic landscape.