Sunday, April 14, 2024

IMF Proposes 18% GST on Petrol Prices

Before the new government begins discussions with the International Monetary Fund (IMF) about a long-term economic plan, the IMF has proposed increasing the general sales tax (GST) from 0% to 18% on various items, including petrol.

The IMF estimates that this could generate approximately Rs. 1,300 billion, which would account for 1.3% of Pakistan’s Gross Domestic Product (GDP). However, the IMF hasn’t considered the potential impact of this tax hike on prices and people’s lives.

Currently, people already pay significant taxes on petrol, including a petroleum levy of Rs. 60 per liter. The price of petrol stands at Rs. 279.75, and if an 18% GST is added, it could become even more expensive.

This could further burden people who are already struggling with high prices. Recently, the government announced an increase of Rs. 4.13 in petrol prices, bringing the new price to Rs. 279.75, while diesel prices remained unchanged.

This issue is crucial for Pakistan because it heavily relies on imported oil, which constitutes about 85% of its oil consumption.

With the economy facing challenges and inflation reaching over 28.3% in January, even minor price increases have significant implications for everyone.

While the IMF agreement aims to improve the economy, it might mean that people have to pay higher taxes and energy costs, which is challenging for Pakistanis.

The potential consequences of this tax increase could be far-reaching. Higher transportation costs could make it difficult for families to afford essential items. Moreover, businesses reliant on fuel might face increased expenses, potentially affecting employment opportunities and overall economic growth.

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