Effectively July 1, the prices of petrol, diesel and kerosene have been increased by between 10 to 15 per cent by the federal government. The reason: international oil prices have risen in recent weeks, meaning the revenue the government had planned to raise from a carbon surcharge would have been eliminated by a subsidy if local petroleum prices were not increased to reflect the international change.

Faced with an understandable outcry from the public, the government has tried to portray itself as a victim of circumstances and claimed its hands are tied — there is neither the fiscal space for a petroleum subsidy nor does the agreement with the IMF allow one. What the government isn’t willing to delve into though are two awkward questions that arise with any form of taxation: raise money from where and for what purpose?

Begin with the first. The Rs120bn that will be earned from the carbon surcharge this year is necessary if the government is to have any hope of reaching its revenue target of Rs1.5tr. But while the carbon surcharge is easy to impose, it is also highly regressive and affects the lower and middle classes disproportionately. Whether you travel in a bus or an air-conditioned car, the percentage impact of the fuel price increase will be the same. And transport charges will rise uniformly, meaning the rich and the poor — the already suffering poor — will have to pay the same rate of tax on basic foodstuffs and other essentials.

The alternative would be to raise taxes from elsewhere; Pakistan has an abysmal tax-to-GDP ratio of less than 10 per cent and there are many, many areas that have yet to be taxed. But because the political will and capacity are lacking to rope in sectors with powerful lobbies, governments in Pakistan always opt for the easy option of indirect taxation that is highly regressive. There is, then, no doubt whatsoever that in the present circumstances a petroleum tax is highly unfair.

Next, the question about what the tax revenue is being used for. Here too there is absolutely no doubt that there is lot of fat in government and that wasteful expenditures can and should be reined in. A grotesquely large cabinet, billions spent on foreign trips of government officials, many of dubious importance, the devil-may-care attitude of elected officials to spending public money — all of this adds to the bill that the taxpayers have to pay for. There is a stench of a reverse Robin Hood syndrome hanging over the government.