Govt to collect around Rs100bn from masses in July after a Rs14/liter POL price hike

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ISLAMABAD: The caretaker government will collect almost Rs100 billion from the masses in the month of July 2018 after a decision to raise the price of petroleum products (POL) by Rs14 per litre, Pakistan Today has learnt reliably.

Instead of providing relief to the general public by maintaining the prices of petroleum products, the caretaker government on late Saturday jacked up oil prices by Rs5 to Rs14 per litre for July further burdening the already economically suffocated general public.

Official sources at the finance ministry on condition of anonymity said that the caretaker regime has planned to collect around Rs100 billion from the masses in July 2018 on account of various taxes including the Inland Freight Equalization Margin (IFEM), companies, and dealers margins etc. They said the caretaker government will fetch Rs42 billion under the head General Sales Tax (GST), Rs17 billion on account of petroleum levy, while Rs8 billion in the name of customs duty, and Rs5 billion under the head deemed ‘duty’ from the masses. Also, Rs20 billion is to be collected from the public to benefit oil marketing companies (OMCs).

“The Finance Ministry has already communicated the hike in POL prices to the Oil Marketing Companies (OMCs) on 25 July while the ministry rejected a proposal to pass on a 50 per cent hike to masses on late Saturday (30 June),” said sources.

The sources further added that although a rise of Rs8 per litre was proposed after adding the impact of oil prices in the international market and the increase in the value of US dollar, the caretaker finance minister Shamshad Akhtar advised to further increase Rs6 in the per litre price of high-speed diesel (HSD).

It is also learnt that the caretaker government has taken the decision of heavy collection from the public under head POL prices apparently because the honourable Supreme Court of Pakistan can provide relief in the oil prices. The Supreme Court is likely to give relief to the public as a case to decrease the taxes imposed in POL prices is currently under trial and the court is expected to advice massive cuts in taxes. The honourable apex court has already advised reducing the taxes imposed on mobile cards of mobile phones, while the finance ministry and the federal board of revenue (FBR) are all set to collect additional amounts prior to a decision of relief to the public by the Supreme Court.

It is important to note here that the increase in GST from 24 per cent to 31 per cent has resulted in the Rs14/liter hike instead of 8/litre raise in the price of HSD, though the government has already been collecting a variety of taxes including the 13 per cent regulatory duty on diesel (HSD) and 5 per cent customs duty on petrol.

Similarly a rise of Rs0.26 per liter in the margin of companies and dealers has been of benefit for them from July 1 despite the fact that the government has already been collecting Rs3.91 per litre on account of the IFEM for the transportation of motor spirit (92RON petrol) and Rs1.55/litre for the transportation of diesel (HSD). Besides, OMCs had already been involved in billion rupees worth fraud of IFEM. These OMCs had charged IFEM by showing on paper the transportation of petrol and diesel to AJK and GB while they (OMCs) were found selling petrol and diesel in Rawalpindi and parts of Khyber Pakhtunkhwa instead of their transportation to Gilgit-Baltistan and Azad Kashmir and most often people belonging to these areas were found protesting against the artificial shortage of oil in their areas.

Sources in the oil sector said that petroleum dealers across the country, except of the ten big cities of the country including Karachi, Lahore, Rawalpindi, Quetta, Peshawar, Faisalabad, Multan etc were used to additionally charge the consumers from Rs2 to Rs4 per litre, and, a recent hike will add to the worries hurting the general public.

It is worth mentioning here that the OGRA (Oil and Gas Regulatory Authority) had proposed an increase in the prices of petrol by Rs7.55 per litre, diesel by Rs14 per litre, kerosene oil by Rs3.36 per litre and light diesel oil by Rs5.92 per litre. However, the government approved a massive hike in the prices of POL products and set the new price of motor spirit 92 RON petrol at Rs99.5 per litre, high-speed diesel Rs119.31 and kerosene oil and light diesel oil at Rs87.7 and Rs80.9, respectively.

Citing the “tight fiscal position”, the finance ministry in a statement late on Saturday said the government has passed on “the full impact of the increase to the consumers”.

“The increase in the petroleum prices is caused due to the increase in petroleum prices in the international market and depreciation of the rupee against US dollar,” read the statement.

The official statement also said that the financial impact of the dispensation would be implemented through the revision of the sales tax rates and the petroleum development levy.