| Welcome to Global Village Space

Thursday, July 18, 2024

Tax relief worth Rs465 billion given since August: Hammad Azhar

Minister for Energy in his senate speech compared the petroleum and diesel prices in Pakistan with prices in other countries across the world, leaving out oil producing countries. He also took a jab on the previous government when comparing the tax rates on petroleum products during their time.

Federal Minister for Energy Hammad Azhar in his speech in the Senate made some startling revelations pertaining to the rise in the prices of petroleum products. He stated that tax relief worth 465 billion Pakistani rupees was given on the orders of the Prime Minister of Pakistan to keep these prices under control.

He mentioned that petroleum prices across the globe had gone up by 39% since January 2021, but in Pakistan the prices had gone up by only 16%. High-speed diesel prices had risen by 36% during the same time span, but in Pakistan the prices have increased by only 9%. All this was because the government had not increased the taxes on petroleum products.

The minister hit back at the former ruling party and pointed out that during their regime, they had not passed on the benefit of low prices of oil in the international market. On the contrary – according to the minister – the PML-N government increased the sales tax and petroleum levy. “The sales tax – usually 17% on all products – was 56% on petrol at a point during the rule of PML-N,” said Hammad Azhar. The tax rate on petrol and high-speed diesel is 10% and 11% respectively.

Read more: IMF program wants Pakistan to increase taxes despite Covid-19

Azhar claimed that petroleum levy, during the rule of the previous government, was approximately 15 to 20 rupees which currently stands at five and a half rupees on petrol and approximately five rupees and forty-five paisas on high-speed diesel.

Moreover, the energy minister informed that because of the lower tax rates in Pakistan, petroleum products’ prices are lowest not only in the region, but also when compared to many of the developed nations – excluding the oil producing countries.

An important point to note is that the federal minister quoted the prices of petrol in other countries after converting them in Pakistani rupees. Keeping in mind the fact that Pakistani currency is the worst-performing currency in the region, such comparisons have drawn criticism for the PTI government.

It is worth noting that converting the prices of petrol in other countries to our local currency for the purpose of comparison doesn’t change the fact, that, when converting the prices of petrol in other countries to dollars will yield the same result i.e., the price of petrol in Pakistan is lower than most other countries – regionally and globally.

In the case of our eastern neighbor, for example, the price of petrol there when converted to Pakistani rupees comes out to be approximately PKR 233. When converting the price of petrol in Pakistan and price of petrol in India directly to dollars, it comes out to be 72.5 cents per liter in Pakistan and $1.37 in India.

The disruption of global supply chain as a result of the pandemic was cited as the reason behind the boom in commodity prices across the world.

Read more: Tarin assures IMF officials of ‘full commitment’ to the EFF programme

Last week, during a press conference, the finance minister also emphasized the fact that the government had increased the price of petrol by 5 rupees against the advice of 1 rupee per liter by OGRA, but increased the price of diesel by only 5 rupees per liter against the increase of 10 rupees per liter by the regulatory authority.