Budget 2024-25: Govt Plans Higher Petrol & Diesel Taxes

Jawad

12 Jun 2024

207

Budget 2024-25: Govt Plans Higher Petrol & Diesel Taxes

Amidst anticipation of a decrease in petrol prices in the upcoming revision, a surprising development emerges forecasting a new crude shock. In the proposed fiscal budget 2024-25, Finance Minister Muhammad Aurangzeb introduces a staggering hike of Rs. 20 in the levy imposed on petrol and diesel, elevating it from the previous Rs. 60 to the new Rs. 80 mark.

This decision stems from the necessity to comply with IMF-recommended reforms, aimed at securing an upcoming loan program with the International Monetary Fund (IMF). The burden falls primarily on the salaried and middle-class citizens, reflecting the government's efforts to enhance revenue through taxation while reducing subsidies on consumption.

Reports suggest a potential imposition of an 18% GST on petroleum products, which currently stands at 0%. Should this materialize, petrol prices will soar to unprecedented levels, exacerbating the challenges faced by Pakistan's inflation-stricken populace already grappling with soaring living costs.

This alarming development marks a reversal from the consecutive declines in petrol prices witnessed in recent fortnightly price revisions. For Pakistan, heavily reliant on oil imports (around 85%), such fluctuations hold significant implications. Coupled with an economy in distress and inflation exceeding 28.3% in January, even minor price adjustments wield considerable influence over the population.

While the IMF deal aims to stabilize the economy, its implementation entails higher taxes and energy costs, presenting a formidable challenge for Pakistanis. Beyond the pump, the ripple effects of these hikes extend to transportation costs for essential goods and services, exerting additional strain on household budgets. Moreover, businesses reliant on fuel for operations may encounter heightened expenses, potentially impacting employment and overall economic activity.