FEBR urges govt to cut oil tax
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The Friends of Business and Economic Reforms (FEBR) on Sunday called for reducing tax ratio on petroleum products to pass on full benefit of cut in global oil prices to the trade and industry, as the government has escalated petroleum levy as well as sales tax on oil products to the record high level of Rs40.45 per litre.
FEBR President Kashif Anwar said that Pakistan’s economy is going through a challenging phase due to the outbreak of Covid-19 pandemic. With a view to improve the cash flow of businesses at this crucial time, the government will have to facilitate the business community through reduction in tax ratio on all items including the oil products, besides deferring the interest payments of the businesses for a period of at least six months.
FEBR President Kashif Anwar observed that the government has already increased the general sales tax on all petroleum products to a standard rate of 17 percent across the board to generate additional revenues. Earlier, the government has been charging 0.5 percent GST on light diesel, 2 percent on kerosene, 8 percent on petrol and 13 percent on HSD.
He said that the brent crude rates have dropped by up to 90 percent to $12.5 per barrel. But the authorities, instead of providing full relief of massive fall in oil rates to the public further escalated the prices of petroleum levy on petrol by another 26% to the highest level along with the GST. Besides the 17 percent sales tax, the government has lifted the rate of petroleum levy on HSD and petrol by around 400%, during last almost one and half years.
At a time when country’s GDP ratio was further stretched owing to slow exports growth amidst high cost of doing business, the trade and industry need maximum relief.
FEBR President observed that business-friendly policies should be adopted as other neighboring countries of the region are giving to trade and industry.
He said that sizeable cut in oil rates would certainly bring down the cost of doing business and our products would get their due share in the global market.
Kashif Anwar said that price of petrol was reduced just by Rs7 but actually it should have dropped by at least Rs15 per litre if government did not further increased petroleum levy by about Rs.7 per litre, making the total taxes and levies on petroleum sale at around Rs40.45 per litre.
Regarding upcoming federal budget, he called upon the government to address the key issues of trade and industry, facilitate the economic growth along with improving tax revenue of the government.
Kashif Anwar said that the impact of COVID-19 has badly affected business and industrial sector, stressing the government to bring down GST and policy interest rate to 5 percent in order to ease the difficulties of businesses. The move would reduce the cost of doing business, attract new investment, promote industrialization and create new jobs.
He said that turnover tax should be reduced from current 1.5% to 0.25% or zero percent for the next 3 years for manufacturers and retailers. He said that to combat the impact of Covid-19, government should defer the requirement of CNIC for sales transactions of Rs.50,000 and above till June 2022. He further said that government through an ordinance has provided exemption from Sec-111 of Income Tax Ordinance 2001 to investors in construction sector, which should also be provided to all other industrial sectors in the forthcoming budget.