Islamabad:
Pakistan delayed Friday against the demand of the International Monetary Fund (IMF) to impose a carbon tax on oil products, coal and internal combustion motor cars, which the global lender defends to discourage the use of fossil fuels.
The IMF has proposed that the existing oil tax increases from RS60 per liter to RS70 per liter for three years, starting with RS3 per liter in the first year, according to government sources. Additional income generated by tax can be used for activities to promote green energy, according to the proposal.
The sources said the IMF also wants to increase the federal tax rates existing in internal combustion motor cars (ICE), and the additional duty is treated as a carbon tax.
On Friday, discussions were held between an IMF team and Pakistani officials of the Ministry of Petroleum, Ministry of Finance, Ministry of Climate Change, Ministry of Industries and the Federal Income Board.
On the same day, the Government appointed Ali Pervaiz Malik as the new oil minister, while his predecessor, Dr. Musadiq Malik, was appointed Minister of Climate Change.
The sources said that the Pakistani authorities were not receptive to the demand of the IMF and expressed concerns about the use of funds generated in the name of climate protection, as well as the professional problems of the Federation.
There were also concerns about imposing a carbon carbon tax, which falls under the provincial jurisdiction, they added.
Unlike a tax, which is shared with the provinces under the National Finance Commission, the collections of a tax remain outside the distributable group. However, in the case of a carbon tax, half of the income must be assigned to the provinces, according to Fuentes.
The sources also said that the FBR supported the proposal to increase federal special tax rates in cars. Cars in Pakistan are already taxed, and taxes represent 36% to 45% of the total price, depending on the variant.
Currently, the Government imposes the anticipated income tax, the sales tax, the Federal Tax and the strong registration rates in new cars.
The IMF had also raised the issue of a carbon tax last month during the negotiations for the resilience and sustainability center (RSF), a package of IMF loans designed to support nations vulnerable to the weather. Pakistan is looking for more than $ 1 billion of the IMF under this installation.
The Minister of Finance, Muhammad Aurengzeb, declared this week that disbursements under the RSF will be linked to real expense related to the climate by the country.
One of the resilience conditions is the imposition of a carbon tax, which lenders want Pakistan to apply to internal combustion motor vehicles and fossil fuels.
According to government estimates, 10% of total carbon dioxide emissions originate in the transport sector, and a change to cleaner vehicles will require massive funds and efforts.
The Engineering Development Board is in the process of finishing a five -year -old new energy vehicle policy (Nevs). The initial estimates of the Ministry indicate that Pakistan will need at least RS155 billion in additional funds by 2030 to replace cars and combustion motor motorcycles with alternatives based on clean fuel.
The transport sector consumes almost 80% of the oil imported from Pakistan. Conversion to cleaner energy vehicles could save foreign exchange reserves, but the transition is expensive and will require subsidies to reduce vehicle costs and promote a new infrastructure, including tax exemptions and concessions, the sources said.
The IMF proposal suggests that carbon tax revenues should be used to compensate for the high cost of two -wheeled electric vehicles.
According to the Engineering Development Board, traditional two -wheeled motorcycles are up to 100% cheaper than two new energy vehicles, while new new energy vehicles are up to 123% more expensive.
The government of Prime Minister Shehbaz Sharif aims to ensure that by 2030, up to 90% of the new purchases of two and three -wheel vehicles are based on renewable energy sources.
It is estimated that the new four -wheeled cars based on technology are 65% more expensive than combustion motor vehicles. The Government points to at least 30% of new cars purchases by 2030 are based on new technologies, sources said.
According to the World Bank, a carbon tax could be beneficial for the development of Pakistan from multiple perspectives. Pakistan imports almost a third of its energy in the form of oil, coal and liquefied natural gas (RLNG) re-gasified at a huge cost, contributing significantly to the country’s chronic fiscal stress, he added.
Pakistan recently signed a $ 1.2 billion agreement to buy Saudi oil in deferred payments. The installation was secured to meet the balance balance needs and will be used to buy Saudi oil.
The Government also plans to introduce national standards for the efficiency of vehicle emissions aimed at promoting newer and efficient vehicles.
