ISLAMABAD: As international oil prices continue to fall, the government is poised for a significant reduction in fuel prices.
However, the government is considering a tax hike to address a growing revenue shortfall which could partially offset the expected price decrease.
According to sources, the Federal Board of Revenue (FBR) is proposing a one percent increase in all withholding taxes rates from October 1, 2024, if the revenue shortfall persists.
Petrol prices are anticipated to decrease by Rs11 per litre, and high-speed diesel (HSD) could see a reduction of Rs11.5 per litre. This price adjustment is contingent on the government not raising the petroleum levy by Rs5 per litre for the second half of September.
Govt reduces petrol price by Rs1.86, HSD’s by Rs3.32 per litre
This move is aimed at bolstering the FBR’s tax collection efforts, which have fallen short of targets in the first two months of the current fiscal year.
The FBR has experienced a revenue gap of Rs98 billion during July and August 2024, primarily due to missed targets in various tax categories.
To mitigate this shortfall, the government is exploring options such as increasing the petroleum levy.
Despite the potential tax hike, consumers are expected to benefit from lower fuel prices.
Petrol prices are anticipated to decrease by Rs11 per litre, and high-speed diesel (HSD) could see a reduction of Rs11.5 per litre. This price adjustment is contingent on the government not raising the petroleum levy by Rs5 per litre for the second half of September.
If the government does decide to increase the petroleum levy, the price cut for fuel will be less substantial, potentially around Rs5-6 per litre. However, sources said with the declining trend in petroleum sale/consumption in the country, it would be difficult for the government to raise the petroleum levy.
The anticipated reduction in fuel prices is a result of declining international oil prices with effect from September 16, 2024.
If approved, the consumers could pay as low as Rs247.60 per litre for petrol and Rs251.75 per litre for HSD from September 16 to September 30, 2024.
Copyright Business Recorder, 2024