Sales tax on luxury fuel in the offing

The imposition of sales tax on luxury fuel is on the cards while the government also considers increasing the rate of the petroleum levy with the imposition of 17% general sales tax (GST) in a bid to collect around Rs9 billion in taxes annually. This is in line with contingency measures to keep revenue collection on target, as agreed with the International Monetary Fund (IMF). The Economic Coordination Committee (ECC) recently approved raising the petrol levy to Rs20 per litre on High Octane Blending Component (HOBC), turning down the proposal to impose 17% GST on fuel. The government raised the petroleum levy to Rs50 per litre which will enable the collection ofRs160 million per month in revenue on HOBC. This is despite the fact that there was a proposal to impose GST on HOBC. However, the economic decision-making body preferred raising the levy on HOBC as the revenue collected would go into the federal kitty. GST collections, however, have to be shared with the provinces; therefore, the federal government preferred raising the levy on HOBC to add more revenue into the federal coffers.