ISLAMABAD: The Federal Board of Revenue (FBR) has used creative accounting to show positive results in terms of taxes on petroleum products this month.
Unlike the past practice of notifying the rate of sales tax on petroleum products, the FBR announced on Tuesday the impact of the tax and compared the figures of September 2016 with those of April 2013.
According to FBR’s calculations, the impact of sales tax on per-litre price of petrol was Rs10.71 this month as against Rs14.86 in April 2013, Rs19 on high-speed diesel (HSD) versus Rs15.78, Rs12.86 on high-octane blending component (HOBC) as against Rs19.18, Rs2.06 on kerosene compared to Rs14.28, and Rs4.64 on light diesel oil (LDO) as against Rs13.55.
However, the comparison is misleading as the average per barrel price in April 2013 was $93.22 a barrel, almost double as compared to the current prices.
The factual position is that under the various categories through the sales tax statutory regulatory orders (SROs) — SRO806 of 2016 and SRO500 of 2016, the rate of actual increase in sales tax for September on various petroleum products was already notified by the FBR.
Through the SROs, the sales tax rates on petrol was increased to 20pc ad valorem in September 2016 from 17pc in the preceding month, HOBC to 21.5pc from 17pc, HSD to 35.5pc from 28pc, and LDO to 12pc from 8.5pc.
The rate of sales tax on kerosene remained the same at 5pc in the past two months, ie August and September. The standard rate of sales tax is 17pc.
A tax official said the tax rates have been increased to such a higher level to make up the revenue losses because of falling oil prices.
Spokesperson for the FBR Dr Muhammad Iqbal said in a statement on Tuesday that in view of falling petroleum prices in the international market, the government has been adjusting sales tax rates on petroleum products since January 2015 to rationalise the revenue stream as well as the consumer prices.
“This practice was also adopted in many countries to protect the tax revenues which were falling due to linkage with the prices”, he said.
“In Pakistan, however, public interest was given due priority and as a result the country has the lowest petroleum prices in the region,” he said.