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Jamaat-e-Islami (JI) Pakistan has presented six proposals to the government as part of negotiations aimed at ending the levy, saying the measures could generate substantial savings and additional revenue for the country.<\/strong><\/p>\n Naveed Ali Baig, a key member of the JI negotiating team, said the proposals included correcting the pricing mechanism for locally produced petroleum, reducing refinery margins, lowering the government\u2019s borrowing costs, renegotiating with remaining independent power producer (IPP) agreements, ending unnecessary subsidies and improving the Federal Board of Revenue\u2019s (FBR) performance.<\/p>\n Local oil pricing<\/strong><\/p>\n Naveed Baig said the government could save around Rs.120 billion by correcting the pricing mechanism for locally produced oil.<\/p>\n Pakistan consumes about 16billion litres of petrol and diesel annually, he said, of which around 4 billion litres are produced domestically.<\/p>\n \u201cIf Pakistan is buying oil from abroad at $100 a barrel, the locally produced oil should not be valued at the same international price,\u201d he said.<\/p>\n He argued that adjusting the valuation of locally produced petroleum could generate savings of about Rs.120 billion.<\/p>\n Refinery Margins<\/strong><\/p>\n The JI has also proposed eliminating the difference between the margins on imported refined fuel and fuel refined locally from imported crude oil.<\/p>\n According to Baig, there is currently a difference of about Rs.21 between the two.<\/p>\n \u201cIf we can save Rs.21, it would generate around Rs.185 billion,\u201d he said, adding that implementing the measure would not require significant time.<\/p>\n Lower borrowing costs<\/strong><\/p>\n The party also gave a proposal to the government team to reduce the interest rate on government borrowing to cut debt-servicing costs.<\/p>\n Naveed Baig said the interest rate was currently around 11.5 percent and argued that bringing it down to 9 percent could save the government about Rs.1 trillion a year.<\/p>\n He said the government currently spends around Rs.8 trillion annually on interest payments, with a significant portion going towards domestic borrowing from commercial banks.<\/p>\n Renegotiating IPP agreements<\/strong><\/p>\n JI has also called for further renegotiation of agreements with independent power producers.<\/p>\n Baig said the party had previously staged a sit-in over the issue and had demanded that the government renegotiate the agreements.<\/p>\n He said agreements with 15 to 20 companies had already been renegotiated, resulting in a 10-15 percent reduction in electricity costs.<\/p>\n \u201cIf the remaining companies are also renegotiated, another Rs.400 billion could be saved,\u201d he said.<\/p>\n The savings, according to Baig, would come from payments the government makes to power producers, including capacity payments and other charges.<\/p>\n Ending unnecessary subsidies<\/strong><\/p>\n JI also proposed eliminating what it describes as unnecessary subsidies across different sectors.<\/p>\n Baig said the World Bank had identified several areas where such subsidies could be reduced or eliminated.<\/p>\n He estimated that the measure could save the government around Rs.1.1 trillion annually.<\/p>\n Expanding the tax base<\/strong><\/p>\n The sixth and final proposal focuses on improving the performance of the Federal Board of Revenue (FBR) and closing what JI describes as a large tax gap.<\/p>\n Baig said Pakistan could increase its tax collection by around Rs.3.4 trillion by bringing under-taxed or untaxed sectors currently into the tax net.<\/p>\n He said the International Monetary Fund (IMF) and World Bank had also highlighted the need to address sectors with significant tax potential.<\/p>\n \u201cThe FBR has failed,\u201d he said, arguing that much of the government\u2019s revenue is collected automatically through mechanisms such as withholding taxes on salaried employees and customs duties on imports.<\/p>\n According to Baig, salaried workers have income tax deducted directly from their salaries, while importers pay customs duties before their goods are cleared.<\/p>\n He argued that the FBR\u2019s role in collecting a large portion of existing revenue was therefore limited, and that its performance needed to improve by focusing on sectors where tax evasion and under-reporting were more prevalent.<\/p>\n JI says implementing the six measures could provide the government with significant fiscal space and reduce the need for an additional petroleum levy on consumers.<\/p>\n<\/div>\n