IMF Suggests Implementing an 18% Tax on Gasoline Prices

Hey Pakistan! Brace yourself for a possible increase in petrol prices that could reach new heights. This situation is reminiscent of 2023 when petrol prices hit a record high of Rs. 331.38 per liter due to IMF requirements, global oil trends, and a weakening Rupee. The resulting economic impact burdened the population with rising living costs.

Before the new government starts negotiations with the IMF for an extended program, reports suggest the IMF has recommended raising the general sales tax (GST) from 0% to 18% on various items, including petroleum products.

The IMF estimates that this adjustment in GST rates could generate revenue equivalent to Rs. 1,300 billion, contributing 1.3% to Pakistan’s GDP. However, the potential inflationary effects of this indirect taxation have not been assessed by the IMF.

It’s important to note that citizens already pay significant taxes on petrol, including a Rs. 60 petroleum levy, totaling Rs. 83.52 per liter. With petrol prices currently at Rs. 279.75, the addition of an 18% GST could lead to further inflationary pressures on the struggling population.

Recent Increase in Petrol Prices

The caretaker government recently announced a Rs. 4.13 increment in petrol prices, bringing the new rate to Rs. 279.75, while diesel prices remained unchanged.

This situation is critical for Pakistan, a country heavily reliant on oil imports (around 85%). With a weak economy and inflation at over 28.3% in January, even minor price changes have a significant impact on the population. While the IMF deal aims to stabilize the economy, it comes with increased taxes and energy costs, posing a major challenge for Pakistanis.

The potential repercussions of these price hikes go beyond the pump. Transportation costs for essential goods and services are likely to rise, putting more pressure on household budgets. Businesses dependent on fuel could face higher costs, potentially affecting employment and economic activity as a whole.

What are your thoughts on the upcoming petrol price hike? Share with us in the comments section.