Record hike in petroleum levy may help in reducing revenue shortfall

KARACHI: Former Provincial Minister Mian Zahid Hussain has said that the record hike in petroleum levy would help the government reduce revenue shortfall.

A meeting was held today between Mian Zahid Hussain, President Pakistan Businessmen and Intellectuals Forum (PBIF), President All Karachi Industrial Alliance (AKIA), and  Senior Vice Chairman of the Businessmen Panel of FPCCI.

The government has not reduced petroleum prices as per the expectations which will help it raise few hundred billion rupees, Mian Zahid Hussain

Hussain further said that the petroleum levy will not be enough to cover the entire shortfall therefore sales tax could be increased by one percent on various items.

Talking to the business community, the veteran business leader said that Russia, Saudi Arabia, and other countries are trying to arrest the fall in oil prices.

If it rebounds, the government will have to hike sales tax by two to three percent while a steep fall in oil prices will provide relief, he added.

The Former Minister noted that Prime Minister Imran Khan has refused the IMF’s desire to introduce a mini-budget, revise energy prices and increase taxes but the revenue agreed with the lender target must be achieved.

A revenue target of Rs5550 billion was agreed with the IMF which was revised to Rs5238 billion which if scaled down again will do away with the need to increase the sales tax.

He said that it is very difficult for the FBR to collect more than Rs4461 billion which will be short of Rs777 billion which was talked by imposing the highest every petroleum levy in the history of the country.

He noted that enhancing sales tax will politically difficult, it will trigger inflation, hit businesses and agitate masses.

Last year the private sector took Rs587 billion as loans which have been reduced to Rs179 billion which indicates economic contraction.

He said that social safety programs for the poor are good but the masses will only get desired relief when the growth rate is triggered, exports are promoted and import curbs are softened, he said.