ISLAMABAD - The government has decided to impose upto five per cent Regulatory Duty (RD) on the import of petroleum products in a bid to increase its revenue that is adversely affected due to the declining oil prices in the country.

The government is not happy with the sharp decline in oil prices in the country, as the revenue is not recording required growth. Therefore, the economic managers have considered several options to offset an expected drop in collections.

“The government is seriously contemplating to impose upto five per cent Regulatory Duty on the import of petroleum products, otherwise, the situation is unsustainable for the economic managers of the country to restrict the budget deficit within level”, said a top official of the finance ministry while talking to The Nation on the condition of anonymity.

“Regulatory Duty can be three to five per cent”. The decision would result in increasing the prices of oil but will generate revenues for the cash starved government.

He informed that declining oil prices are benefiting the masses but at the same time it is reducing the government’s revenue, which is forcing us to take alternative measures. In the current circumstances, the government could impose the RD, which is currently at zero per cent. Some other countries like India had also imposed levies/duties on import of POL prices for maintaining their macroeconomic indicators, he added.

 “Currently, there are two issues for the government, one due to decreasing oil prices, the collection of General Sales Taxes has reduced and second, inflation has come down due to rupee appreciation”, he said and added due to both reasons, government’s revenue is declining.

When contacted Finance Minister Senator Ishaq Dar for taking his comment, he said, “The government’s tax collection will reduce by Rs 65 to Rs 70 billion during ongoing fiscal year due to the declining oil prices in the country”. He added government is considering some alternate measures for compensating the impact of deceasing oil prices.  He further informed that inflation had touched the 11-years lowest side of four per cent in November 2014.  Sources in Federal Board of Revenue informed The Nation that government could not achieve the annual tax collection target of Rs 2.81 trillion set for the ongoing financial year 2014-2015 due to the declining oil prices in the country. They believed that tax collection could go to Rs 2.6 trillion by the end of June 2015.

Meanwhile, International Monetary Fund (IMF) in latest Pakistan’s review noted that FBR might collect Rs 2.756 trillion as against the target of Rs 2.81 trillion, with the shortfall of Rs 54 billion.

It is worth mentioning here that oil prices are continuously decreasing in Pakistan, as they reduced by around Rs 20 per liter in last two months (November and December). Similarly, the petroleum products prices are expected to reduce by around Rs 10 to Rs 12 per liter for the next month of January.  The FBR has been assigned the revenue collection target of Rs 2,810 billion for the fiscal year 2014/15. The revenue body had collected provisional figures of Rs 900 billion during July-November, in which Sales Tax posted only eight per cent growth.