ISLAMABAD, March 30: The government will have to find alternative sources of taxation to bridge a budgetary gap of Rs46 billion owing to non-recovery of petroleum development levy (PDL). The need for additional taxation to bridge the gap was highlighted before the Public Accounts Committee (PAC) here on Wednesday by Central Board of Revenue Chairman Abdullah Yousaf.
In response to a question by PAC Chairman Malik Allahyar if it was possible to reduce the taxes on oil products to reduce the fuel pries, the CBR chairman said it was a matter of government policy. However, he said the government has not been able to recover Rs46 billion in lieu of PDL because of increase in international oil prices.
“There is no recovery of PDL so far. The government is out of pocket,” he said. Yousaf said sales tax was being collected on petroleum products. He said if tax had to be reduced at one end then either the government had to cut the expenditure at the other which was difficult. “It will be another game of balancing the balls,” he said.
When the chairman PAC said tax on oil products had to be reduced and diverted to other areas to stop the ripple effects on prices of consumer commodities, Mr Yousaf accepted that the taxes on petroleum products had an effect on other areas of economy. He said ministry of finance would be able to give a better picture after a decision to reduce taxes is debated at the policy level.
Another committee member, MNA Ch Nisar Ali Khan said the petroleum surcharge was a means to fill the government coffers and a means of budgetary support mechanism. He said the CBR should give its policy input to the government to reduce the petroleum surcharge and suggest alternative and creative ways of raising taxes.
