PM Imran Reduced Sales Tax on Petrol from 17% to 0

Sales Tax on Petrol

These days, petrol prices have become a common subject of discussion. Not a day goes by without news or update on the petrol prices in Pakistan. Today’s update is that, for the first time in the history of Pakistan, the government has reduced the sales tax on petrol to zero.

Minister of State for Information and Broadcasting Farrukh Habib brought the news via Twitter, saying PM Imran Khan has reduced the sales tax on petrol from 17% to 0, even when the petrol prices rose 100% globally. He added that the government gave up on hundreds of billions of tax income for public relief. 

The minister didn’t leave it at that (of course!) and called out the opposition, saying that PLMN used to take higher taxes on petrol despite lower global prices. 

What does this mean?

So, here’s the thing, there are a few factors behind petroleum prices. Cost of supply, freight, Oil Marketing Companies margin, dealers commission, petroleum levy, and General Sales Tax (GST). The government can’t control the price at which they import petroleum products, which means the first two factors are not in their hands. 

Then there’s the profit margin of Oil Marketing Companies (OMCs) and dealers. That, too, does not come under the umbrella of our government. 

The government can reduce two things to give the public relief: the petroleum levy and sales tax. The former is currently at Rs. 9.6, whereas the latter has been reduced to an absolute zero. 

However, no sales tax does not mean there won’t be any more price hikes. Petrol rates will continue to rise in Pakistan if global prices keep going up. 

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