• Govt breaks own record by earning over Rs275bn in first half of current year
• Petrol, HSD generate most revenue

ISLAMABAD: Breaking its own record of last year, the government has collected the highest ever Rs275.32 billion petroleum levy in the first half of the current year.

The consolidated fiscal data for July-Dec 2020 released by the finance ministry showed that petroleum levy (PL) collection in the first half of the current year was almost 100 per cent higher than Rs137.95bn collected in the same period in FY2019.

Even the petroleum levy collection of last year was in itself a record — over 68pc higher than the collections in the first half of FY2018.

However, the levy collection in July-Dec 2018 (first part of the PTI government) at Rs81.91bn was lower than Rs93.84bn (about 13pc) of the comparable period (July-Dec 2017) of the PML-N government. The PTI had been critical of the previous government for charging high levy rates on petroleum products and had initially started lowering PL rates.

As such, the petroleum levy has become the single largest non-tax revenue directly imposed by the federal government on petroleum products on per litre basis. Otherwise, the surplus profit of the State Bank of Pakistan at Rs375.5bn is the largest non-tax revenue that indirectly accrues primarily on account of interest on government borrowing.

The PML-N government had been charging a maximum of Rs6-14 per litre PL on various products. However, the PML-N government incorporated the maximum PL rate in the finance bill 2017-18 at Rs30 per litre on petrol, diesel and high octane but was never able to actually charge such rates.

The finance minister at that time, Asad Umar, had initially announced that the clause would be withdrawn from the finance bill which had remained untouched. Later, the PTI started increasing PL on almost all products which peaked to Rs30 per litre until a few months ago.

Interestingly, the government has set a target for PL collection at Rs450bn in the budget for the current fiscal year. However, with Rs275bn or about 61pc of collection already made in the first six months, the government was now comfortable with downward adjustments in petroleum levy. At present, the government is charging Rs21.04 per litre PL on petrol, Rs22.11 per litre on High Speed Diesel (HSD), Rs6.91 per litre on Light Diesel Oil (LDO) and Rs5.54 per litre on kerosene oil.

As such, the government is now charging a total of about Rs41 per litre tax on petrol and Rs42 per litre on HSD. Over the last many months, the government has been tweaking with petroleum levy rates instead of GST as levy remains in the federal kitty while GST goes to the divisible pool taxes and thus about 57pc share to the provinces.

The petrol and HSD are two major products that generate most of the revenue for the government because of their massive and yet growing consumption in the country.

Average petrol sales are touching 700,000 tonnes per month against the monthly consumption of around 600,000 tonnes of HSD. The sale of kerosene oil and LDO are generally less, at 11,000 and 2,000 tonnes per month, respectively.

The finance ministry’s data showed that the SBP’s surplus profit during the first half of the current year was about 12.7pc lower than Rs426.5bn in comparable period of last fiscal year.

The finance ministry showed the total revenue collection in first half of the current year to be Rs3.351 trillion or 7.4pc of the GDP compared to Rs3.23 trillion or 7.3pc of the GDP during the same period last year.

The data showed tax revenues declined to Rs2.456tr or 5.4pc of the GDP in the first half of the current year when compared with Rs2.465tr or 5.6pc of the GDP last year.

Published in Dawn, February 6th, 2021