Senate Finance Committee rejects carbon levy on petroleum

ISLAMABAD: Senate standing committee for finance on Thursday rejected the budget proposal for imposing carbon levy on petroleum with majority of vote.

The government has proposed Rs 2.5 carbon levy on petrol in federal budget for fiscal year 2025-26.

Senator Sherry Rehman opposing the levy said that there is difference between the carbon levy and carbon tax. “There is no place in the world where carbon levy been imposed but carbon tax used to be enforced”. “It requires an act of law and not enforced with the finance bill,” PPP senator further said.

Senator Mohsin Aziz said that the Supreme Court has restrained imposition of carbon levy in Zafar Iqbal Jhagra case. “It will be contempt of the court if carbon levy imposed”.

Sherry Rehman said that carbon taxes been enforced over specific industries with an aim. “You are imposing all types of levies and that also directly over the public users,” Rehman said.

“You are collecting money for climate change and using it over roads,” Senator Shibli Faraz said.

“Petroleum prices already skyrocketing owing to the Israel-Iran conflict, where the prices would go if the levy imposed,” Senator Abdul Qadir asked.

Power Division representative said that the Levy has been the part of the IMF’s RSF facility. Carbon Levy used to be imposed once in a year, he further said.

“Where the money generated by the levy will be used,” Senator Saleem Mandviwala asked. “Rs 45 billion revenues generated from carbon levy, which also be spent over the steps for green economy,” power division official replied.

“It is our party stance that the carbon levy could not be imposed with the finance bill. Show us the conditions of the IMF’s RSF facility,” Sherry Rehman said.

The Senate body rejected the budget proposal for carbon levy on petroleum with majority vote.