IMF demands Pakistan to impose up to Rs100 carbon tax on petroleum products

The International Monetary Fund (IMF) has demanded Pakistan to impose a carbon tax on petroleum products to achieve the benefits of value-added tax (VAT) for documentation and digitisation.

Sources said that the government is mulling on introducing a fresh move for adding a new tax on petroleum products.

It added the future development programme is ready to be aligned with climate public investment management benchmarks.

However, the global loan lenders is mulling the revival of standard GST on petroleum products in addition to up to Rs60 per litre petroleum levy.

The Washington-based lender aims to transform the existing GST scheme with a universal VAT mode of taxation "with no exception or preferential treatment to any sector".

The authorities suggest the carbon tax, which will be imposed in the upcoming budget, will be as much as Rs100 per litre to increase revenue generation from POL.

Sources said the two carbon taxes could be dedicated to environment-friendly expenditures that replace carbon-emitting practices and contain greenhouse gas emissions.

Moreover, both taxes (petroleum levy and carbon tax) would be in place simultaneously in case of a final decision.