Govt likely to increase petrol prices by Rs20 from Sept 1
The coalition government is likely to increase the prices of petroleum products by a massive Rs20 per litre from September 1, in an attempt to revive the stalled $6 billion IMF bailout package, according to sources.
According to the Letter of Intent (LoI) to IMF, 10.5% sales tax will be imposed on petroleum products (PoL) from October, after which the price of petroleum products is likely to increase by Rs20 per liter.
In order to fulfil the pre-requisites of the IMF, the federal government is likely to abolish the sales tax exemptions on petroleum products for the agricultural sector from September 1, the sources added.
It is mentioned in the Letter of Intent that by removing the tax exemption on the agricultural sector, government will earn a revenue of Rs150 billion.
According to IMF’s Letter of Intent, more additional taxes will be imposed on Tier 1 and Tier 2 cigarettes, and revenue of up to Rs60 billion is likely to be collected by imposing taxes on sugary drinks.
It is pertinent to mention that the government has already removed subsidies from petroleum products in line with an IMF agreement, triggering a wave of inflation.