The federal government has increased the Climate Support Levy on petrol and high-speed diesel from Rs. 2.50 to Rs. 5 per litre. The revised levy came into effect on July 1 under the Finance Act 2026 as part of the government’s latest tax and financial reforms.
Despite the increase in the Climate Support Levy, consumers will not see any change in the retail prices of petrol and high-speed diesel.
This is because the government has reduced the Petroleum Levy on both fuels by a similar amount. As a result, the overall tax burden on fuel remains balanced, keeping pump prices unchanged.
The revised tax structure replaces a portion of the Petroleum Levy with the Climate Support Levy instead of adding a new cost for consumers. Officials say the adjustment is designed to support climate-related initiatives while maintaining stable fuel prices across the country.
According to the government, the Climate Support Levy is part of Pakistan’s broader strategy to generate funding for environmental and climate-related projects.
The revenue collected through the levy is expected to help support efforts aimed at addressing climate challenges and promoting sustainable development.
The measure is also linked to the government’s wider fiscal reform agenda. These reforms are being introduced as part of Pakistan’s commitments under its programme with IMF.
The government has been taking various steps to strengthen public finances, improve revenue collection, and meet agreed economic targets.
Officials have stated that the latest adjustment reflects an effort to balance economic reforms with public relief. By restructuring existing fuel taxes instead of increasing overall prices, the government aims to support climate financing while avoiding additional financial pressure on consumers.
