The Oil and Gas Regulatory Authority raised the prices of petroleum products on Thursday following a presidential ordinance. The hike came a day after the Supreme Court suspended a government-imposed carbon surcharge in an effort to keep the price of petroleum products low.
The price hike means that petrol will now be available at Rs 62.13 per litre while kerosene is now priced at Rs 59.35 per litre.
Is the ongoing petroleum price see-saw a clash of perceptions between the executive and the judiciary? What does the price hike indicate about government priorities? Are local petroleum prices tied to the international market, or is this price hike a result of IMF requirements for Pakistan?
Pakistan is one of the few countries in the world where there are no capital gains taxes. So middle and upper class people can make money buying and selling stocks and real estate (even other than their principal residence) without incurring any taxes on gains. This is mind boggling for an impoverished and debt laden country. And we all know about there being no taxes on rich agricultural land owners. But every Pakistani pays hidden taxes on food and daily use items and on fuel and those taxes hurt the poor the most. The tax system in Pakistan should be like in most other countries in the world where people are actually taxed based on their true income from all sources.
The issue is that the people of Pakistan expect everything for free. Energy is not free. It takes millions of years to make oil and millions of dollars to take it out of the ground, and the people of Pakistan pay no tax unless forced to do so and expect electricity, gas and petrol to be free! Why does logic escape their minds? Energy is not a right, like anything it has to be paid for.
Nobody expects gold for free, why do they expect energy for free? The only free thing in the world is Air, apart from that, everything has to be paid for.
I don’t understand what does judiciary has to do anything with carbon tax. The opposition in the government should voice concerns for the people.
Look people,
The government is thinking in terms of covering it’s budget deficit, which is enormous, and staying in power.
It is not politically possible for the government to tax agriculture, capital gains, or the banking sector. Its politicians come from these fields, elected by the people. The people need to rise up, or get the CJ to move against the unfair weight on one group while another goes scot free. That’s a better case in court than this Carbon Tax charade.
Increasing corporation taxes in a time of loadshedding and recession will cause more damage than benefit as it will actually lose revenue, so that is not an option. Not till the loadshedding is still going on. Then the government will move to tax utilities and businesses.
The government is already looking to replace its Sales Tax with a VAT, which will increase its revenue by quite a lot. It is also easier to collect. It could, however, prove to be inflationary, but it is necessary on many items, especially luxury goods. Essential goods should be exempt. This is the practice around the world.
I think the government should also reverse Musharraf and Shortcut’s policy of free trade. It should reinstate punitive tariffs for luxury goods and other goods which are a huge drain on our import bill. Tariffs will also give the government quite a bit of revenue.
The government would like to tax Income and Wealth, but the people are flat out dishonest, rich or poor, they will not step up and pay. These taxes are progressive, but the PEOPLE do not want to pay them. So the government has no choice but to tax regressively. It needs to get revenue.
The Carbon Tax is not a bad idea. However, it is unfair to put it all on oil. Coal, natural gas, Wood (cutting it down), i.e. anything that raises CO2 emissions in the atmosphere should be taxed too. Industry will be hurt, but the point of a carbon tax is to cut carbon emissions. If the government taxes for that purpose, the Supreme court cannot rule against it.
The government can theoretically cut down its bureaucracy and ministries, but it is a weak coalition (like Mush’s government of past), so unless it wants political suicide, it won’t take such a step. It should, but won’t.
The big expenditures apart from administration are defense, BISP, PSDP, and Agricultural Subsidies.
Now, agricultural subsidies are a must in time of food shortages. I think the government will gradually remove them once the situation gets better. It’s not sustainable.
The BISP (Benazir Income Support Program) is politically popular, as the PPP came to power on Benazir’s name, it’s going to stay on her name too.
Defense Expenditures are needed because of the War on the Western border. What I don’t get is, why isn’t this being financed by the US? It’s their war. Why is this government paying for it? Giving our bills to the US will benefit our budget a lot. If only our government had the brains.
I think the PSDP (Public Sector Development Program) should be scrapped from the budget altogether. Instead, the government should get all those projects financed by private investors, domestic as well as foreign, giving them their share of the profits. As for non-commercial projects, the government should not engage in these right now. It does not have the money, simply put.
As for those of your complaining why the government is hiking up the price of oil, the problem is two-fold. One, the government doesn’t have revenue, so it uses oil revenue (it sets the price) to get revenue lost from Tax evasion. This practice should end after enough taxes are collected from other means.
However, even when the international price of oil falls, the government doesn’t lower the price domestically. This brings me to the second part of the problem, our trade deficit. Keeping oil prices high is a way to dramatically reduce oil imports. Reducing oil imports lowers our trade deficit, which means that foreign currency doesn’t flow out and the rupee doesn’t collapse. If the rupee were collapse, we would have hyperinflation.
So I hope now , after reading this, people will actually understand WHY the government is doing what it is doing, and not post uneducated comments here.
As regrettable as it sounds at face valuem but unfortunately unless one understands the whole economics of it its foolhardy castigating the Government for levying the tax. I sympathise with the government for being caught between a rock and a hard place but decreasing the budget deficit is the need of the hour so the public needs to swallow the bitter pill unless it wants the budget deficit to multiply forcing government to increase money supply resulting in even a higher inflation.
Agreeably its going to supplement public’s woes but is the alternative of increasing our deficit an acceptable slip road ?? Not really. Although I respect the judiciary and am very happy that the Chief Justice was restored to his rightful position (kudos to the lawyer’s movement) however I will really advise the judiciary not to become overzealous and do what it does best. Unless the esteemed judiciary got additional degrees in economics and finance I had advise them not to rule on things that go much beyond Law 101. Let each function do their job and not encroach on each other’s domain of specialty.
Cheers
Khurram
Since when do courts started making policies?
Tax the agriculture? That will increase the cost of bread directly.
The real brilliance of this solution is that without the incentive of much profit nobody will grow much produce, hence there will be a famine and thenpoor will be taken care of once and for all!
People of Pakistan never requested the sitting government to go and ask for the loan from IMF, nor will the money be invested for the betterment of the poor masses.
Government knows how to impose new taxes on the masses but does not want to reduce the lavish spending of MNA’s, MPA’s and Senator’s of the treasury benches.
The entire nation is looking towards the Supreme Country of Pakistan in getting relief.
Today’s oil price is $ 60.00 per barrel, let us assume to be average out at $ 67.00 for the budget period and take Rs 80/- for a dollar; so the cost of barrel (with 159 litres) will cost Rs 5,360 /- .Now add:
Transportaion cost @ 6% Rs 322
Refinery cost @ 15% Rs 852
Government taxes @ 10% Rs 653
Misc @ 7.5% Rs 539
Cost of barrel for user comes to, Rs 7,726 /- (one barrel having 159 litres) i.e. Rs 48.60 / litre.
The last government price was Rs59.35/litre. That is, the government was already charging Rs 10.75/- per litre extra. So instead adding the cost they should reduce to atleast at Rs 55.00/litre. Surcharge addition means effecting each and every person directly or indirectly. Why don’t they collect this 722 billion from land / agriculture tax, only few will be effective.
If I recall correctly, we did pay petrol around Rs. 60 last year… so this amount is not new., we lived through it before!
Should we pay extra to ensure financial sovereignty or continue to fall prey to IMF loan surcharges, which we can’t pay back?
About people who propose agriculture tax, are u for real? Agriculture relates to the food that we eat, if you increase this cost, this directly leads food being expensive.
Least with petrol, it only affects people with cars or transport, its impact is mostly Urban, since in rural areas (which consists of most Pakistanis) we still use animals for transports.
Other indirect effect it still has on people .. that is in transport of food.. which paradoxically some people are asking for taxing directly..
I think its OK that prices have been raised—people should pay for their decision to vote for these leaders—why cry now—
increase revenue, not enough money. yaar please don’t fall for this .The problem is created by the government alone.it has brought no revenue generation plan in the country.it is barely trying to survive with no vision
the government is wasting not spending hugely the spendings at the presidential house, pm house, governor houses and chief minister houses are immense. All is done with the tax payer money.Even if decreasing to a some extent the spendings here forgetting about the rest , we will not be needing any petrol tax simple as that
The point here is not that the price of petrol is high. It is high, yes, but the point is that the Supreme Court in the first place had no business to give such a ruling against a bill that was unanimously passed by parliament. Does the Supreme Court understand what Democracy is all about? I dont think so. Its actions are merely confrontational. Welcome another round of lawyers vs the government.
In my opinion, the imposition of carbon surcharge taxes is disastrous as far as economy of the poor people is concerned. In this country everything is sky-high. People are unable to put the food on their table, increasing taxes is something suicidal I feel.
This is nothing new to Pakistan whether it be democracy or dictatorship. Its now upto to the people to decide as to take action and come on the streets or to get crushed as ever. Remember peoples power is very strong.
The corrupt Govt of PPP will certainly take it as its defeat and humiliation in from the the Supreme Court of Pakistan to suspend Carbon/Zardari??? Tax. It was a great and right decision in favor of the general masses of Islamic Republic of Pakistan.
The Parliament (National Assembly) MNAs, Senators and even MPAs at provincial level have proved their incompetence and they did not speak on the floor of the House against Carbon Tax to protect the interest of the voters because they were happy to hear the news of Rs.2 Crore projects as a bribe to support on this count the corrupt PPP Govt.
The issuance of the Ordinance and reimposing Development Levy Tax is illegal and it will have no legs to stand upon when challenged in front of the Supreme Court of Pakistan as what Govt cannot get directly also cannot get indirectly. This shows the mala fide intention of the Govt to rob people of Pakistan for their misuse, luxuries and to feed the bloated cabinent. Now we hear the news to induct 10 more ministers!!!! What a stupid and corrupt govt of PPP.
To reduce expenditures cars must be withdrawn from all bureaucrats, MNAs MPAs and Senators and let them ride omni buses and Poond Rickshaws; dissolve all Parliaments and just only keep the Senate only for legislation purposes. The double salaries of Police must be withdrawn and put them back on the old scale and grades. Withdraw all free facilities from govt functionaries including Wapda, PTCL, PIA, Railway etc.
Put a ban on press conferences of President and PM we dont want to hear their sermons. God Bless Pakistan, Amen.
Imposition of carbon surcharge tax at this critical time of the country is highly regrettable I feel. It will crtainly and seriously hurt the common people financially I think, who are already under severe inflationary pressure. I think it was duty of the elected public representatives to have thought the repercussions to the people of this inflated POL prices. Come what may, I believe the supreme judiciary has wisely acted in the interest of the common people. The judgement should have been honoured.
Many people do not pay taxes honestley and a lot of people feel that the government(local, provincial, federal) does not spend it wisely, consequently everyone blame each other, leaving government no other option except to impose indirect taxes, which are destructive for poor and rich get away easily. To solve this, in my opinion, first of all the government must prove to the public that their tax money is being spent wisely and honestly, then in my opinion, instead of imposing hidden taxes, government should impose one general sales tax at final sale point, sparing few essentials of daily life such as milk, bread, sugar, ghee, vegetables etc and some types of clothes and few life saving medicines. Anyone found evading general tax, I feel, should be given examplery punishment. When general public will see their tax contribution on purchase receipt everyday, they will make it very hard for their leaders to steal it or spend it unwisely. They still pay it, but they don’t see it on paper.
I request the executives to please take pity on your poor nation who already are under crisis
Judicial Activism is tool to provide justice. Even in the US where Justices have acted in a larger public policy concern they have been accused of the same. The question is whether the Court had the proper authority to act, and if the decision is pure politics. All decisions have a public policy aspect, but they cannot be taken out of the thin air, there must be basis for action. After 120 days, President can extend this, Bush did this a few times as well, like when he appointed Bolton as UN Chief when congress did not allow him to do so.
This needs to play out in court,and eventually people have to hold the political leaders accountable at election, maybe even a mid term election. I think this is deeply tied with the issue of 17th Amendment, which is at the heart of all core power struggles being waged.
TAX should be imposed on the things like agriculture which affects mainly the rich,while imposing tax on the petroleum products mainly affects the poor so my plea is to kindly cut off the carbon tax from the petroleum products
I think government is right to hike the price of petroleum products, it needs money as it is rumored that ten new Federal Ministers are joining the cabinet.
MH Choudhry
May Allah guide us all,specially our leaders.No one in the government is saying that they should cut/reduce their expenses,but instead their are finding ways to put more taxes on poor people of Pakistan.
What SC has done -is right,we all have to back SC;because our government/leaders are not listening us.They are only interested in put new taxes so that they plenty of money to spend.
May Allah guide us all
This is not about oil or taxes.
All this signifies few things. No 1 is inability of different organs of state to take decisions after consultations and give a unified approach and face to the world.
No2 is the manouvering of opposition PML N to reinstate chief justice and to use him to topple the elected government.
No 3 . In my opinion these people in the top places of power , whether in the government or in opposition will ultimately cause the loss of nuclear deterrent and perhaps dismemberment of the country by their shenighians.
supermacy to constitution seem break through civilian dectatorship,