Business Recorder says Pakistan's real fuel burden is tax, not price

Business Recorder's 3 November editorial questions the daily fuel pricing Pakistan adopted on 17 July. The paper relays the calculation of an Attock Refinery executive: folding pre-war premiums into the petrol price costs refiners 35 rupees a litre, and the daily cuts made to lower the petroleum levy cost another 14 rupees. The total burden on domestic refineries thus reaches 49 rupees a litre. The executive warns that a decision taken without consulting the industry could erode lender confidence in refineries seeking finance.

The editorial breaks the pump price into its parts. The import or ex-refinery price accounts for 71.8%, the petroleum levy for 20.3%, and company and dealer margins for 4% combined. The carbon levy agreed under the IMF's climate resilience programme stands at just 1.3%. The petroleum levy is budgeted at 1.677 trillion rupees this year, equal to 11% of the Federal Board of Revenue's target. Since the formula rests on a 7-day Platts average, the paper argues that weekly adjustment may make more sense.

Petroleum Minister Ali Parvaiz Malik says targeted subsidies against the closure of the Strait of Hormuz have reached 12–13 million people; the paper notes that he never mentions the tax burden. Jamaat-e-Islami is threatening a march on the capital unless the levy is cut. In the editorial's view, cutting the levy would shift the gap onto the Federal Board of Revenue and push the IMF towards indirect taxes that hit the poor harder. The paper's prescription lies on the spending side: current expenditure makes up 93% of the total, and debt servicing roughly 46% of the annual budget.