Increase in Petroleum Levy: What it Means for Pakistanis

The recent increase in the petroleum levy in Pakistan has raised concerns among the public. The National Assembly has approved an increase in the per litre petroleum levy on all products to Rs50, up from Rs30 per litre, which will give an additional revenue of over Rs400 billion to the government. This move has been made to counter the rising fiscal deficit of the country, but what does it mean for the average Pakistani? Let’s take a closer look.

What is Petroleum Levy?

Petroleum levy is a tax imposed on petroleum products such as diesel, petrol, kerosene, and other petroleum-based products. It is a type of indirect tax that is collected from the consumers who purchase these products. The levy is charged per litre or per metric ton, depending on the product. The collected revenue is used to meet the government’s expenditures on various development projects and to reduce the fiscal deficit.

Reasons for the Increase in Petroleum Levy

The government of Pakistan has been facing a severe fiscal deficit for several years. The fiscal deficit is the gap between government spending and revenue. The deficit is usually bridged by borrowing from international financial institutions or printing more money, which can lead to inflation. To avoid this, the government has decided to increase the petroleum levy to generate more revenue.

Impact on the Common Man

The increase in the petroleum levy is likely to have a ripple effect on the economy. The prices of all products that rely on petroleum, such as transportation, food, and other essential commodities, are expected to rise. This will make life more difficult for the average Pakistani who is already struggling to make ends meet. The cost of living will increase, and the purchasing power of the common man will decrease. This will lead to a decrease in the standard of living, which is already quite low in the country.

Impact on the Business Community

The business community is also likely to be affected by the increase in the petroleum levy. Transportation costs will increase, which will lead to an increase in the prices of goods and services. This will make Pakistani products less competitive in the international market, and it will become more difficult to attract foreign investment. The business community may have to bear additional costs, which will impact their profit margins.

Impact on the Government

The increase in the petroleum levy is expected to generate more revenue for the government, which will help reduce the fiscal deficit. The additional revenue can be used to invest in various development projects such as infrastructure, health, education, and social welfare programs. However, the government needs to ensure that the revenue is used wisely and that it reaches the people who need it the most.


The increase in the petroleum levy in Pakistan is likely to have a significant impact on the economy and the common man. While the move is aimed at generating more revenue to reduce the fiscal deficit, the impact on the average Pakistani cannot be ignored. The government needs to ensure that the revenue generated is used wisely and that the impact on the common man is minimized. In the long run, the government needs to focus on reducing the fiscal deficit through structural reforms rather than relying on indirect taxes such as petroleum levy.

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