Latest news with #PetroleumLevy
Business Recorder
24-05-2025
- Business
- Business Recorder
Less hydel output: Generation mix changes may affect rebased tariff: Nepra
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Friday said that impact of change in generation mix due to less hydel generation is expected to effect the proposed rebasing tariff for the fiscal year 2025-26. Testifying before Senate Standing Committee on Power, presided over Senator Mohsin Aziz, Nepra Chairman Waseem Mukhtar said since there is substantial decrease in rains in the country, it will alter the projected generation mix for next fiscal year, which implies that whatever relief was expected for next year, will not be available. The standing committee was apprised that current relief of Rs 7.41 per unit is available to consumers from April 2025, of which the impact of revision or termination of agreements is around Rs 1.81 per unit, QTA Rs 2.37 per unit, FCA Rs 1.12 per unit and Rs 2.12 per unit due to raising the Petroleum Levy will continue but relief under QTAs and FTAs is subject to economic conditions of the country and the price of fuel in the international market. Hydel reduction forecast: Nepra seeks generation plan from PD Minister for Power, Awais Leghari informed the committee that he has held a meeting with the Finance Minister on deduction of provinces reconciled amounts. Currently an amount of Rs 161.472 billion is outstanding against provinces but no province is ready for reconciliation except Punjab. Of total receivables of Rs 161.472 billion, share of Punjab is Rs 41.832 billion, Sindh, Rs 67.960 billion, Balochistan, Rs 41.600 billion and KP, Rs 10.080 billion. The minister expressed anger at the absence of senior officials from PPMC and CPPA-G to respond to queries of Standing Committee members as junior officials were unable to provide the explanations requested by the Committee members. On the issue of ToU meters, the minister stated that an exercise has been done in coordination with Aptma, which proves that if the mechanism of ToU meters is done away with it will have additional impact of Rs 35 billion on industry. Copyright Business Recorder, 2025
Business Recorder
05-05-2025
- Business
- Business Recorder
Tax revenue target for 2025-26
The process of preparation of the federal and provincial budgets is underway now and the respective budgets will be announced in the earlier part of June 2025. One of the crucial determinants of the size and level of fiscal effort is the overall tax revenue target for 2025-26. This article will attempt to make the likely revenue projections for the federal government and the four provincial governments combined. The first step will be to estimate the likely revenue outcome in 2024-25 of tax revenues. Thereafter, a disaggregation is undertaken of tax revenues into FBR revenues, petroleum levy revenue and provincial tax revenues. A comparison is made with the projections in the IMF Programme for 2024-25, after incorporation of changes following the review mission by IMF staff in March. The target for 2024-25 of total tax revenues is Rs 14,954 billion, as given in the IMF Staff report. Over 86 percent is to come from FBR revenues, with the target at Rs 12,913 billion. The remainder is Rs 1,123 billion is from the Petroleum Levy and other levies and Rs 918 billion from provincial tax revenues. The overall growth rate targeted in tax revenues in 2024-25 is an ambitious 34 percent. FBR revenues are expected to show even faster growth of 38.7 percent. Provincial tax revenues are projected to increase by 18.6 percent and the Petroleum Levy by only 4.6 percent. The information on total tax revenues in the first six months has been released by the Federal Ministry of Finance. The overall growth rate is 24.6 percent. This is significantly lower than the target growth rate of 34 percent. As such, there was already a revenue shortfall of Rs 500 billion by the end of December. The latest numbers up to the end of March 2025 are available of the total revenue collection by the FBR. It stands at Rs 8,464 billion, with a shortfall already of over Rs 700 billion. Provincial tax revenues continue to exhibit low growth. However, the rates of Petroleum Levy have been enhanced with falling international price of oil. Consequently, additional revenues of up to Rs 100 billion are likely to accrue from this source. Based on the performance in the first nine months, the projected outcome of FBR revenues in 2024-25 is likely to be close to Rs 11,800 billion. This implies an annual shortfall of over Rs 1,100 billion. In fact, FBR is unlikely to even meet the downward revised target in agreement with the IMF of Rs 12,300 billion, following the March Staff mission. Total tax revenues are projected now at Rs 13,700 billion in 2024-25. This means that there will be a shortfall of up to Rs 1,250 billion. However, it is important to note that the target in the IMF Programme for total tax revenues was 12.3 percent of the GDP, thereby leading to a big increase in the tax-to-GDP ratio of 1.8 percent of the GDP in 2024-25. The nominal GDP level is likely to be lower in 2024-25 than the initially projected level by the IMF. Consequently, the total tax revenues are likely to approach 11.8 percent of the GDP. Therefore, the shortfall will be relatively small at 0.5 percent of the GDP. The next year's target in the IMF Programme of FBR revenues is of Rs 15,070 billion. With projected revenues in 2024-25 of Rs 11,800 billion, this will require achievement of a relatively high growth rate of almost 28 percent. The various tax bases are currently showing low nominal growth rates because of the colossal drop in the rate of inflation. As such, a target growth rate of FBR revenues of 28 percent borders on being unrealistic. The IMF Programme expects the FBR revenue to GDP ratio to rise to 11.0 percent of the GDP, as per the original projections in 2025-26. With the revenues at close to 10 percent of the GDP this year, a feasible target is 11 percent of the GDP in 2025-26, so that the original target for 2025-26 is met. The likely rate of increase in the nominal GDP in 2025-26 is 14 percent. As such, the appropriate target for FBR in 2025-26 is Rs 14,370 billion. This will imply a growth rate of 21.8 percent. The original target of Rs 15,000 billion requires a significantly higher underlying rate of inflation in the economy in 2025-26. The focus next year is also likely to be on provincial tax revenues. An extraordinary growth rate of 74 percent has been targeted for these revenues in 2025-26. Clearly, this is based on the expectation that the new Agricultural Income Tax law will be implemented from July 1st, 2025 and substantial additional revenues of over Rs 500 billion will be collected in 2025-26. A recent estimate in the RASTA research project of the Pakistan Institute of Development Economics is that the potential revenue from the agricultural income tax on crop income is Rs 880 billion, on the tax base of 2023-24. This is equivalent to 0.8 percent of the GDP. Therefore, subject to proper assessment of individual tax liability and effective collection, revenue of Rs 500 billion from the agricultural income tax is feasible. The petroleum levy has been targeted to yield Rs 1,193 billion in 2025-26. The significant fall in oil prices should enable the target to be enhanced to Rs 1,400 billion. Overall, a summary is presented below of the likely outcome in 2024-25 and feasible targets in 2025-26 of tax revenues. The above targets will enable achievement of the overall target for tax revenues in 2025-26 as envisaged in the IMF Program of 13 percent of the GDP. =========================================================== Tax Revenues (Rs in Billion) =========================================================== 2024-25 2025-26 (Projected) (Target) =========================================================== FBR Revenues 11,800 14,370 Provincial Tax Revenues 840 1,470 Petroleum Levy 1,300 1,400 Total Tax Revenues 13,940 17,240 % of GDP 11.8 13.0 =========================================================== Copyright Business Recorder, 2025
Express Tribune
11-04-2025
- Business
- Express Tribune
Power division issues notification, reduces electricity prices by Rs1.71 per unit
Listen to article The Power Division has issued a notification announcing a reduction of Rs1.71 per unit in electricity prices for consumers across the country, including K-Electric. This price cut will be applicable from April to June 2025. According to the notification issued by the Power Division, the price reduction will benefit consumers nationwide, including those under K-Electric. However, the reduction will not apply to lifeline consumers. The price cut has been made possible through additional subsidies from the federal government. It is worth noting that, just a day prior, the National Electric Power Regulatory Authority (NEPRA) had approved the government's request to reduce electricity prices, including in Karachi, under the Petroleum Levy. NEPRA has sanctioned a price reduction of Rs1.71 per unit, and the decision has been forwarded to the federal government for implementation. This price reduction comes after a previous adjustment in electricity tariffs, where a Rs1.90 per unit reduction was applied to the quarterly adjustments for consumers across the country, including in Karachi. Earlier, Prime Minister Shehbaz Sharif had announced a reduction of Rs7.41 per unit for residential consumers on April 3, bringing the price of electricity for domestic users down to Rs 38.37 per unit. Additionally, a reduction of Rs7.59 per unit was announced for industrial consumers, lowering their electricity price to Rs40.60 per unit.
