In what could be another major blow to already struggling households, the government is gearing up to impose a record-high petroleum levy in the upcoming federal budget for the fiscal year 2025-26.
According to insider sources, the proposed target for petroleum levy collection has been set at a staggering Rs 1,311 billion—Rs 194 billion more than the current year's goal of Rs 1,117 billion.
This move, reportedly part of Pakistan’s ongoing agreement with the International Monetary Fund (IMF), is aimed at increasing revenue generation. However, it comes with a heavy cost for the public, as the record-high petroleum levy is expected to directly impact fuel prices, leading to yet another wave of inflation.
Between July 2024 and March 2025, the government has already collected Rs 833.84 billion through petroleum levy charges. For context, total collections during the previous fiscal year (2023-24) reached Rs 1,019 billion, while FY 2022-23 saw collections of Rs 580 billion. The consistent upward trend highlights how crucial petroleum levy has become for the government’s revenue stream.
If the new budget is passed with the proposed changes, it will mark the highest petroleum levy collection in Pakistan’s history, significantly increasing the financial burden on consumers. Currently, the levy stands at Rs 78.02 per liter on petrol and Rs 77.01 per liter on high-speed diesel—already the highest rates ever recorded in the country.
This increase is part of broader IMF conditions that require Pakistan to enhance domestic revenue, but it risks sparking public backlash. As the cost of living continues to rise, many fear that another hike in fuel prices will worsen inflation and strain household budgets even further.
Analysts warn that unless alternative relief measures are introduced, the proposed petroleum levy increase in budget could ignite public unrest and push more people below the poverty line. The government, however, appears committed to meeting its fiscal targets, even if it means passing the burden to the masses.
With the budget announcement just around the corner, all eyes are now on how this petroleum levy increase in budget will shape the economic landscape—and the daily lives of millions of Pakistanis.
