Observer Report
Islamabad
The Friends of Business and Economic Reforms (FEBR) on Sunday rejected the slight reduction in the rates of petroleum products, saying the government is not passing on the full impact of international oil prices’ reduction to the public, as the authorities have increased the overall GST and petroleum levy on petroleum products to the highest level.
FEBR President Kashif Anwar said that the benchmark Brent crude prices have plunged to almost $40 per barrel but the government reduced price of petrol by just Rs1.57/litre and High Speed Diesel by mere 84 paisa per liter, which is not more than a joke, as several other fuels rates were kept unchanged.
At a time when country’s GDP ratio was further stretched owing to slow exports growth amidst high cost of doing business, the trade and industry need maximum relief.
He added that business friendly policies must be adopted as other neighboring countries of the region are giving to trade and industry.
He said the government, instead of providing full relief of steep fall in oil prices to the industry, which is badly hit by the Coronavirus lockdown, further increased the rate of petroleum levy on petrol by another 26% to the record high limit along with the GST.
The government has already increased the general sales tax (GST) on all petroleum products to a standard rate of 17% across the board to generate additional revenues. Earlier till Jan last year, the government was charging 0.5% GST on light diesel, 2% on kerosene, 8% on petrol and 13% on HSD.
Besides the 17% GST, the government, during last almost two years, has raised the rate of petroleum levy on HSD and petrol manifold to Rs30 per liter.
He said that the industry would not be able to contribute to economic uplift of the country if anti-industry decision is taken.
Kashif Anwar added that though oil prices in the international market are on the decline yet instead of passing this benefit to the trade, industry and public, the government started increasing number of taxes and duties on petroleum products.
He said not only the industrial but the agriculture sector would also badly suffer. He said that Pakistan’s agriculture sector is an engine of growth. The significant cut in petroleum prices could reduce the input cost of agriculture production as high-speed diesel is being used in tractors, tube-wells, harvesters, thrashers and other agriculture machinery.
The FEBR leader said that visible reduction in fuel prices would certainly bring down the cost of doing business and Pakistani products would get their due share in the international market.
Kashif Anwar observed that the government had made commitments with the International Monetary Fund for increasing non-tax revenues in order to compensate the revenue shortfall. The revised fiscal plan relied heavily on high the petroleum levy. He said that small industry is facing declining demand in markets and facing problems in executing foreign orders, as the real problem is the high cost of production and a long list of duties and taxes. The government should give priority to the small businesses, by reducing its taxes to strengthen overall economic growth in the country.
