The International Monetary Fund (IMF) conveyed to the Pakistani authorities that while the Petroleum Development Levy (PDL) has considerably increased in recent years, the taxation of petroleum products has declined since 2019. “The relatively low rate of taxation of petrol is also reflected in the sale price relative to other countries.” The IMF emphasized that there is a difference of gasoline prices when compared to selected neighboring countries and emerging economies.

The average 2023 price of gasoline at the pump was $1.12 per litre against $0.97 per litre in Pakistan. The IMF report said that taking off the exemption of petroleum products under the Sales Tax would increase prices by 18% with the standard rate of General Sales Tax.
Moreover, the IMF has also recommended in its Technical Assistance Report with the Pakistani authorities to raise taxes on domestically manufactured automobiles and on luxury goods such as yachts. It also said to increase border control to stop smuggling of oil derivatives.

Pakistan faces a problem of smuggling especially on it Western borders with both Iran and Afghanistan. A 2023 Civil Intelligence Agency report exposed that Pakistan faced loss of more than Rs. 60 billion annually due to smuggling of more than 2.81 billion litres of oil from Iran to Pakistan, as per the report of Business Recorder.

The Fund also recommended the Federal Board of Revenue (FBR) to tax e-cigarettes equal to tobacco in the country.