Energy taxes on petroleum products, natural gas and electricity have acquired greater importance in the tax system of Pakistan over time. The reasons for this development are, first, the large size of tax base, valued at international prices, is almost 8 percent of the GDP. Second, taxing energy is efficient because of inelastic demand. Third, energy taxes effectively act as carbon taxes and reduce the negative impact of emissions on the environment. Fourth, there is need to restrict the oil import bill by higher domestic prices.
Published in Business Recorder, 30th January, 2018