- IMF framework leaves little fiscal space to cut petroleum levy.
- Govt collects Rs27.5bn in Carbon Levy during July-August.
- Govt currently charging Rs80 petroleum levy on petrol, diesel.
ISLAMABAD: The federal government generated Rs220 billion through the petroleum levy during the first two months of fiscal year 2026-27, as it holds talks with Jamaat-e-Islami (JI) over measures to reduce the levy.
However, the budgetary framework for 2026-27, agreed with the IMF under the $7 billion Extended Fund Facility (EFF), leaves little fiscal space for reducing the levy at this stage, according to The News.
It remains unclear how the government intends to address JI’s demand for rationalising the petroleum levy burden. Higher fuel prices have contributed to CPI-based inflation, which has hovered close to double digits during the current fiscal year.
The Climate Support Levy, also referred to as the Carbon Levy, generated Rs27.5 billion during the first two months of the fiscal year, while the New Energy Vehicle (NEV) Adoption Levy yielded Rs7.225 billion.
According to official data, the government has set a petroleum levy collection target of Rs1.676 trillion for 2026-27, against the initial budget estimate of Rs1.468 trillion for the previous fiscal year.
However, actual collections during 2025-26, which ended on June 30, 2026, exceeded the initial target by nearly Rs100 billion, reaching Rs1.567 trillion.
Under the current budgetary framework, the government aims to increase petroleum levy collections by Rs109 billion to Rs1.676 trillion by June 30, 2027, compared with Rs1.567 trillion collected in the preceding fiscal year.
The government is currently charging a Petroleum Levy of Rs80 per litre on both petrol and diesel. Parliament has empowered the federal government to adjust the levy, allowing it to increase the rate without seeking further parliamentary approval.
The government has set a Climate Support Levy collection target of Rs50 billion for 2026-27, broadly in line with the Rs50.159 billion collected during the previous fiscal year. Official data show that Rs27.5 billion was generated through the levy in July and August.
Similarly, the government has budgeted Rs22.481 billion from the NEV Adoption Levy in 2026-27, compared with Rs10 billion in the previous fiscal year. Collections under this head reached Rs7.225 billion during the first two months.
