Pakistan explores new carbon tax

The government of Pakistan has told the International Monitory Fund (IMF) that it will explore the possibility of levying a ”carbon tax” to enhance revenue collection. The country’s Federal Board of Revenue is exploring the possibility of levying an excise duty or ‘carbon tax’ on fuel consumption, which is responsible for pollution problems in Pakistan. The government said the levy would be in line with its promotion of environment-friendly measures to discourage carbon emissions. Sources said that FBR is also examining the legal basis for a new ‘carbon excise tax’ and its implementation in connection with a ‘petroleum surcharge’. If approved, the tax plan might be presented as part of the government’s proposals for 2009 to 2010 budget. The government has submitted supplementary Letter of Intent (LOI) to the IMF, which stated that the FBR is targeting collecting Rs1,300 billion (US$16.17 million), 10% of its revised gross domestic product (GDP) in 2008 to 2009, including an additional yield of Rs65 billion (US$808.46) on account of stepped up auditing and enforcement. Any shortfall in tax revenue would be compensated by revenue from the Petroleum Development Levy, tax administration measures, and expenditure control measures, the LOI said. (April 8, 2009)