Pakistan has opposed an International Monetary Fund (IMF) proposal to impose a carbon levy on petroleum products, coal, and vehicles, citing concerns over fund utilization and federal-provincial cooperation.
During discussions under the $7 billion loan program, the IMF delegation suggested increasing the petroleum levy from Rs60 to Rs70 per litre over three years, starting with a Rs3 increase in the first year. The additional revenue was intended to support green energy initiatives.
The IMF also proposed raising federal excise duty (FED) on internal combustion engine cars, rebranding it as a “carbon levy” to encourage environmental sustainability.
While FBR officials supported the FED increase on cars, the Pakistani government resisted the overall proposal, citing challenges in coordinating federal and provincial jurisdictions—particularly regarding coal taxation, which falls under provincial authority.
Currently, vehicle buyers in Pakistan already pay high taxes, including advance income tax, sales tax, FED, and registration fees, amounting to 36–45% of a car’s price. The government remains reluctant to impose further financial burdens on consumers.
Negotiations between Pakistan and the IMF continue, as policymakers seek alternatives to balance fiscal and environmental priorities.
