Pakistan reviews gas levy and carbon tax revenue usage

Pakistan’s Ministry of Finance has established a committee to review the national gas levy policy and its calculation formula. This move follows concerns from exporters regarding rising production costs and diminished international competitiveness. The committee, which includes government and industry representatives, will examine the existing framework to recommend refinements aimed at addressing export challenges such as energy prices, taxation, and regulatory charges.

Separately, a finance ministry official informed a Senate parliamentary panel that revenue collected from the country’s carbon levy on petroleum products is not earmarked for environmental initiatives. Instead, the funds—collected at Rs5 per liter on petrol and high-speed diesel—are absorbed into the Federal Consolidated Fund. While the levy was introduced as part of reforms under the IMF’s Resilience and Sustainability Facility to encourage decarbonization, officials stated that national accounting rules prevent ring-fencing specific revenue streams for dedicated climate projects.