Procurement News Notice |
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| PNN | 5458 |
| Work Detail | Depriving the masses of the benefits of declined oil prices the government has increased the General Sales Tax (GST) on various petroleum products by 7.5 percent. Instead of lowering the prices of petroleum products, under its monthly price determination policy, the government increased the GST rate on the petroleum products to keep the prices unchanged for September. According the notification issued by the Federal Board of Revenue (FBR), the GST on High Speed Diesel (HSD) was increased by 7.5 percent (from 28 to 35.5 percent) for the month. The GST on High Octane Blended Component (HOBC) was increased by 4.5 percent (from 17 to 21.5 percent). The tax on Motor Spirit (petrol) was enhanced by 3 percent (from 17 to 20 percent) and on Light Diesel Oil (LDO) it was increased by 3.5 percent (from 8.5 to 12 percent). However, the GST on Kerosene was not changed. Despite charging abnormal GST on some petroleum products the government is trying to give public an impression as if it has benefitted them by keeping the prices unchanged. Only last week, while announcing the monthly fuel prices, Finance Minister Ishaq Dar told the newsmen that “this is for the fifth consecutive month that the government has left (kept) the prices of petroleum products unchanged,” but he didn’t tell that against the standard GST rate of 17 percent, the government is charging the consumers more than double sales tax on the HSD. In August, there was downward trend in the oil prices in international market, but Pakistan government didn’t pass on the relief to the consumers. If the government had not increased the tax rate, consumers would have got upto Rs4 per litre benefit on HSD and Rs3 per litre relief on petrol prices – as per Ogra calculation. The government earns around Rs 40 billion per month through Petroleum Levy and General Sales Tax (GST) on petroleum products. Under the changed mode of determining the oil prices, the federal cabinet decided last week to keep the prices of five petroleum products unchanged for September. The final decision was taken by the cabinet instead of the prime minister as per the orders of the Supreme Court, which had ruled that premier had no discretionary powers to decide the prices single-handedly. According the government claim, as a result of keeping the petroleum prices unchanged, the government got extra burden of Rs10 billion in the months of July and August alone. Interestingly, an official source said that the people will pay Rs10 billion extra to government for the month of September due to enhanced GST. The finance minister has time and again rejected the claim of opposition that the government is charging extra GST on petroleum products, and held that GST on petroleum products – except for High Speed Diesel - is less than the level when the PML-N took control. Instead of providing relief to the farmers the government has increased the GST on diesel, putting an additional financial burden on the agricultural sector, which is using 3.5 billion litre diesel annually. About a million tractors and 850,000 tube-wells besides, a large number of harvesters and other mechanical tools are being used in farming and they all run on diesel. Water contributes more than 50 percent cost of agriculture produce, particularly the rice, and 50 percent sales tax on diesel means the major cost of farmers production has increased significantly. Charging double GST on the HSD negates the government claim that they are working to reduce the input cost in agriculture sector. The high input cost in this sector makes the country’s agri-products incompatible to the prices in international market. |
| Country | Pakistan , Southern Asia |
| Industry | Oil & Gas |
| Entry Date | 15 Oct 2016 |
| Source | http://nation.com.pk/national/05-Sep-2016/govt-holds-back-benefit-of-reduced-oil-prices |
