Federal government:
The federal government is prepared to impose a carbon levy in rupees. According to finance division sources, 2.5 per liter on petrol and diesel in the upcoming FY2025-26 budget. This new tax will be implemented in addition to the existing petroleum levy and it is estimated to raise money. 45 billion in revenue next year. In particular, kerosene and light diesel oil will be exempted from this charge.
Sources further revealed that Levi would be doubled. 5 per liter in FY 27, potentially Rs. 90 billion. The revenue collected will be directed to green energy and environmental initiatives under the government’s stability agenda.
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International Monetary Fund:
Unlike previous tax measures, carbon levy will not require separate laws and instead will be included in the existing budgetary provisions. This decision comes in the wake of Pakistan’s discussions with the International Monetary Fund (IMF) regarding the FY26 budget.
However, the new levy is expected to contribute to high fuel prices, adding financial burden on consumers. This step underlines the government’s push for environmentally friendly policies, balanced by fiscal demands.
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