Carbon surcharge removal and its impact

KARACHI - In compliance with the Supreme Court verdict whereby carbon surcharge on petroleum products was put on hold, the OGRA notified removal of the levy here on Wednesday. Accordingly, retail prices have been slashed by 15-19 percent on major products — petrol by Rs11.6 per litre while diesel - - Rs9.28 per litre. With this price notification, now the government is charging no additional tax on oil products, apart from regular sales tax. The apex court directed OGRA to issue a notification to revert petroleum products’ prices back to pre-July 1, levels. According to the notification, Carbon Tax has been eliminated altogether and has not been replaced by Petroleum Development Levy (PDL) yet, resultantly, the final retail prices for MoGas, HSD and Kerosene prices have declined to Rs50.53 per litre, Rs53.37 per litre and Rs53.85 per litre respectively. Though, it would be an immediate relief for the public in general, removal of carbon tax will cost the government a Rs122 billion cut in the revenue target. It is to be noted that no change has been made in the ex-refinery prices, dealers’ and OMCs margins. Only carbon tax has been withdrawn while a slight reduction has been made in the sales tax. Reduction of sales tax is due to the fact that previously it was calculated after including carbon tax. A complete price break-up for petrol is mentioned below. Similarly, Rs8 per litre carbon tax on diesel has been abolished along with sales tax reduction of Rs1.28 per litre. link....