The federal government is set to implement a carbon levy on petroleum products in the upcoming budget a step aimed at boosting revenue but one that may increase the financial strain on consumers.
According to sources in the finance ministry, a carbon levy of Rs2.50 per liter will be imposed on petrol and diesel in the initial phase of the next fiscal year, with plans to raise it to Rs5 per liter in the subsequent year.
The levy is expected to yield around Rs45 billion in revenue during the upcoming fiscal year, with projections indicating that the amount could double by 2027.
The carbon levy will apply only to petrol and diesel, while kerosene and light diesel oil will remain exempt. It will be collected in conjunction with the existing Petroleum Development Levy (PDL).
Officials confirmed that no new legislation will be introduced for the carbon levy’s implementation. Instead, the government intends to utilize the proceeds initially Rs2.50 per liter for green budgeting initiatives.
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The decision comes after the government concluded budget-related discussions with the International Monetary Fund (IMF), finalizing a series of fiscal measures aimed at stabilizing the economy.
However, the introduction of the levy has raised concerns about potential increases in fuel prices for consumers.
