Is the govt set to hike the levy to Rs.100?

Jawad

20 May 2025

161

Is the govt set to hike the levy to Rs.100?

In a major policy shift tied to the International Monetary Fund (IMF)’s Extended Fund Facility, the Government of Pakistan is preparing to implement a petrol tax proposal that includes increasing the petroleum levy Pakistan to over Rs. 100 per litre starting July 2025. The decision is part of a broader effort to boost non-tax revenue, address circular debt, and continue subsidizing the power sector. Among the new measures is a proposed Rs. 5 per litre carbon levy on both petrol and diesel.

Updated Petroleum Levy Structure

Currently, the Pakistan fuel tax includes a Petroleum Development Levy (PDL) of Rs. 78.2 per litre on petrol and Rs. 77.1 on high-speed diesel (HSD) as of May 2025. With current rates already high—petrol at Rs. 254.63 and diesel at Rs. 256.64—this additional hike is expected to further push prices upward.

The fuel price hike may push both petrol and diesel prices close to Rs. 300 per litre if other cost elements stay unchanged. This high petrol price trend is likely to affect middle- and lower-income families the most, raising concerns over affordability and inflation in essential sectors.

Govt’s Revenue Strategy

The government fuel levy increase is part of a long-term fiscal strategy aimed at stabilizing national finances. In the first ten months of the current fiscal year, the PDL has already generated over Rs. 1 trillion in revenue. For the next fiscal year, the target has been raised to Rs. 1.311 trillion to meet IMF benchmarks and strengthen economic stability.

These developments represent a significant petrol price update and are already making waves in petroleum levy news. The Rs 100 petrol tax plan is one of the most debated points in recent economic policy discussions.

Balancing Revenue with Welfare

While these measures aim to improve fiscal health, the government is expected to balance them with social welfare. To counter the impact of the fuel tax Pakistan, targeted subsidies and stronger safety nets may be introduced to support vulnerable households. Clear communication and transparency will also be vital to managing public response and ensuring successful implementation.

The proposed hike in the petroleum levy Pakistan is a crucial component of the government's fiscal roadmap. However, while fiscally necessary, the fuel tax Pakistan raises serious concerns for consumers, especially amid already rising costs. Moving forward, a balanced approach that supports both revenue growth and public welfare will be essential.

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