IMF Demands Carbon Levy on Petrol, Diesel and Cars That Run On Them

The International Monetary Fund (IMF) has asked Pakistan to introduce a carbon levy on petrol, diesel, and vehicles with internal combustion engines above 850cc in the upcoming budget, sources told ProPakistani. The IMF has proposed that if a carbon levy is not imposed, then Rs. 25 billion annually should be diverted from the Petroleum Development Levy (PDL) to subsidize electric transport. The IMF further demanded that the carbon levy should generate at least Rs. 25 billion every year by targeting petrol, diesel, and vehicles that use these fuels. The funds collected through the levy should be allocated as subsidies for electric motorcycles and rickshaws, the IMF emphasized. The Fund has also called for Pakistan to facilitate the purchase of electric two- and three-wheelers, as well as electric vehicles in general, for the next five years. In addition to the carbon levy, the IMF has urged the government to remove existing concessions on locally manufactured and imported petrol and diesel vehicles. Specifically, the Fund is pushing for an increase in the sales tax on vehicles above 850cc from the current 12.5 percent to 18 percent in the upcoming budget. The IMF has set ambitious targets for Pakistan’s electric vehicle transition, demanding that within five years, 50 percent of all motorcycles and rickshaws be electric, and electric vehicles make up 30 percent of total vehicles sold. Sources said the IMF has urged Pakistan to take decisive steps to discourage the use of internal combustion engine vehicles in order to meet climate commitments and reduce fossil fuel dependency.