THIS is with reference to the report ‘Carbon tax on fuel proposed to placate IMF’ (May 17). I support the proposal for the re-imposition of sales tax on petroleum products because such exemption of sales tax has made a significant dent in the divisible pool under the National Finance Commission (NFC) Award in terms of Article 160 of the Constitution, causing adverse impact on provincial shares of the federal sales tax.

The proposal, as mentioned in the said report, calls for increasing the existing rate of petroleum levy from Rs60 to Rs100 per litre with the intention of depriving the provinces of the benefits of the tax yield. However, this is neither desirable nor appropriate.

As for the proposed levy of carbon tax, it will be advisable to levy federal excise duty (FED) on crude petroleum, whether imported or locally-produced, because the federation is not empowered under the federal legislative list (FLL) of the Constitution to levy any tax other than those specifically listed. The whole point of the argument is that fiscal devolution to the provinces should not be undone.

Javeria Siddiqui
Karachi

Published in Dawn, June 1st, 2024