Senate Rejects Rs2.5 Carbon Levy on Petrol in Budget 25-26

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

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

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

Sherry Rehman said that carbon taxes have 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 on roads,” Senator Shibli Faraz said.

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

Power Division representative said that the Levy has been a 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 will also be spent on the steps for the green economy,” the power division official replied.

“It is our party’s 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 a carbon levy on petroleum with a majority vote.