EDITORIAL: The federal government has slashed petrol price by 6.17 rupees per litre, high speed diesel’s by 10.86 rupees per litre, kerosene’s by 6.32 rupees per litre and light diesel oil’s by 5.72 rupees per litre for the fortnight commencing on 1 August.
The decision was taken as a result of a decline in the international prices of oil with petroleum levy remaining unchanged at 60 rupees per litre on both petrol and HSD.
It is yet unclear whether the price of oil will not rise for the next fortnight commencing 16 August as its international prices rose by almost 3 percent on Wednesday with investors concerned about the possibility of the Middle East conflict widening subsequent to the assassination of Hamas leader Ismail Haniyeh in Tehran and the right hand man of Hezbollah leader Nasrullah, Fuad Shukr, in Beirut.
The pressure on the government to reduce taxes as a means to provide relief to an increasingly disgruntled citizenry reeling under persistently high inflation rates is clearly mounting by the day.
Claims that inflation is on the decline has little relevance on the fortunes of those operating in the private sector whose income has not kept pace with inflation for the past four years; while only the 7 percent of our employed who draw a salary at the taxpayers’ expense have been budgeted a pay rise for each of these four years.
Therefore, the gap between the haves and the have-nots is widening and the acceptability of the government’s taxation measures for the current fiscal year seeking to raise income tax rates on the salaried effective this month is yet to be seen.
Jamaat-i-Islami is currently spearheading a protest movement against administrative measures, read a rise in electricity tariffs to achieve full cost recovery and petroleum levy as an important revenue source that the government agreed to implement as a prior condition for the 7 billion dollars Extended Fund Facility programme that has yet to be approved by the IMF Board.
In other words, many analysts argue that the government had little option but to pass on the decline in the oil prices to the general public, given the state of restiveness amongst the general public with some maintaining that it may have been compelled to reduce rates even if international prices had not declined.
However, few are hopeful that a decline in oil prices would lead to an automatic decline in transport costs as we have no history of a downward price movement.
Critics of the incumbent government, particularly those who recently parted ways with the PML-N, are suggesting that to provide relief to the general public the government must consider slashing petroleum levy and reducing the multiplicity of taxes on electricity.
Given that their flawed policies contributed to the current economic impasse, one would have expected greater understanding of the difficulties associated with slashing taxes and the levy – key elements in meeting the IMF conditions; without which the country remains on the brink of default.
There is overwhelming evidence collected over decades that our tax structure is unfair, inequitable and anomalous as it relies heavily on indirect taxes whose incidence on the poor is greater than on the rich. In spite of claims to the contrary, the Finance Bill 2024 does not reflect any meaningful attempt to reform the tax structure and one would have hoped that the government, in the short term defined as six months, opted to slash its own expenditure through voluntarily sacrificing budgeted allocations rather than raise taxes on those who simply cannot afford them any longer.
Copyright Business Recorder, 2024