Govt earns Rs88bn on oil, gas surcharges: Domestic consumers main victims

[Lahori paa jee]

The government has earned a Rs88 billion windfall on oil and gas from domestic consumers on the back of higher international prices during the current year, which is about 83 per cent higher than original estimates of Rs48 billion.

This is the highest revenue earning ever made by the federal government on account of oil and gas surcharges, which is in addition to indirect taxes, like 15 per cent sales tax and other federal duties. About Rs70 billion was collected as surcharge on oil and gas in the 1990s.

Budget documents for the next year suggest the highest windfall has come in the shape of petroleum development levy (PDL) that yielded Rs27 billion during the current year against a zero collection target.

The second largest earning came in the shape of gas development surcharge (GDS). The government had set a target of Rs18 billion as the GDS during the current year. However, actual collection on this account has now been estimated at Rs33.32 billion, showing an increase of about 84 per cent.

The collection of royalty on oil and gas was slightly short of target but the loss is negligible at Rs1.98 billion.

The royalties on oil and gas are transferred to the provinces as part of the net proceeds of the divisible pool. Similarly, gas development surcharge also goes to the provinces, depending on their share in gas production. The PDL on the other hand goes to the federal revenue.

The actual collection in oil and gas revenue this year has been about 30 per cent higher than last year’s Rs68 billion when the government had announced collection of a substantial amount in the form of the PDL. The Rs27 billion collection in the form of PDL this year is about Rs5 billion or 22 per cent higher than last year’s Rs22 billion despite the government estimate that it would no more collect the PDL.

This year the government said it was not imposing any PDL on kerosene, diesel and light diesel oil. The PDL received from petrol is being used to subsidise these products by paying off petroleum differential claims (PDC) to the oil companies and refineries.

The government has estimated to pay about Rs25 billion during the current year.

Interestingly, the government has set a PDL collection of Rs25 billion for the next year against an estimated subsidy of Rs15 billion in the form of PDC payments. This means that the government plans to earn Rs10 billion in windfall profit from petroleum development surcharge.

Despite the record collections, the oil companies’ advisory committee (OCAC) has complained to the government that non-payment of price differential claim to the extent of Rs16 billion was causing unbearable losses to the oil companies and refineries.

The OCAC has asked the government that it has suffered a loss of Rs2 billion on account of interest payments on loans they had to obtain to ensure uninterrupted supplies and demanded release of PDC “to save the oil industry from a potential financial collapse”.

Source

 

[niaz]

Everywhere in the world and in the UK in particular ( except in the OPEC countries) there is a heavy tax burden on the petroleum sector.

Such articles are written with malicious intent and simply to show the government in a bad light. One can understand if you criticise taxes on the food items and medicine or on books.
Tax on petroleum effects every one but the rich more so. Richer you are, more cars you will have and more driving you will do and thus you should pay more taxes.

For heavens sake, how do you expect governemnt to earn revenue if you criticise every tax.
Pakistanis are the biggest cry babies. They revolt when you apply GST, agricultural income is todate withou any significant tax levy; industrialists cry blue murder when raw material imports are taxed. Where and how government is to get money from if not from the taxes on something. How is GOP goin to generatethe funds to spend on education, building roads and on defence if you dont want them to tax anything.!!

 

[Neo]

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Such articles are written with malicious intent and simply to show the government in a bad light. One can understand if you criticise taxes on the food items and medicine or on books.
Tax on petroleum effects every one but the rich more so. Richer you are, more cars you will have and more driving you will do and thus you should pay more taxes.

For heavens sake, how do you expect governemnt to earn revenue if you criticise every tax.
Pakistanis are the biggest cry babies.!!!

Excellent reply Sir. Both the incompetant media aswell as the opposition is to blame for misguiding us with raising such issues. Every single government uses GST to fund a lot of collective services such as defence, free education, building infrastructure etc.