Unaffordable Electricity and High Fuel Prices Cannot Exist Together in Pakistan

If the federal government wants to keep petroleum taxes high, it should give ordinary Pakistanis relief somewhere else. In this writer’s inexperienced eyes, the easiest place to start is the electricity bill.

Fuel prices nearing Rs. 400 per litre are becoming the new normal. Some blame the war, others Platts. The government is also collecting Rs. 106 per litre levy on petrol and around Rs. 101 per litre on diesel.

The government can argue that international oil prices are beyond its control. Fair enough. But it has complete control over how much it spends. This is where the argument about the International Monetary Fund (IMF) starts losing its power.

Logic is Poor

Every time petrol, diesel, electricity or another basic necessity becomes more expensive, the public is told that there is no choice because of the IMF program. But there is always a choice about government spending.

If IMF is really responsible for austerity in Pakistan, why won’t it question our heads of state spending time overseas?

Why should a family struggling with a massive electricity bill be expected to sacrifice while the government continues to carry expensive official travel, allowances, protocol, official vehicles, aircraft and other discretionary costs?

Nobody is asking the government to stop officials from travelling when the trip is genuinely necessary.

The question is much simpler.

An electricity bill shows how quickly costs can pile up.

Consumers do not pay only the headline electricity tariff. Depending on the connection and consumption, bills can include fuel adjustments, quarterly adjustments, financing charges, electricity duty, General Sales Tax (GST), income tax and fixed charges.

How to Find Relief

For households using large amounts of electricity or facing high fixed charges, the effective cost per unit can become extremely high. This is precisely where the government has room to provide relief.

If petroleum levy revenue is considered necessary to keep the fiscal accounts on track, reduce the tax burden somewhere else.

Cut electricity taxes. Remove unnecessary charges. Give relief to households and businesses that are already paying heavily for energy. Reduce taxes on registered solar connections.

But relief should not be financed by simply creating another hole in the budget.

Government Should First Look At Itself

Foreign travel should face stricter scrutiny. Official aircraft and helicopters should be used only when justified. Allowances and protocol expenses should be reviewed. Maybe officials going abroad should be taxed.

The point is that every discretionary expense should be tested against one simple question:

Would the government still approve this expense if the money had to come directly from a struggling taxpayer’s pocket?

Pakistan’s problem is not only that the government needs more revenue.

It is also that people have stopped believing that the government spends their money carefully. That is the real credibility problem.

Although grudgingly, the public can still understand expensive oil. It can understand an IMF program. It can even understand difficult taxes. From what this analyst has read so far, what people will not easily accept is being told to pay more while the government appears unwilling to cut its own luxuries.

If the government wants Pakistanis to share the burden of the economic crisis, it should show that it is sharing it too.

Keep the petroleum levy if you must. But then cut the electricity burden and cut government expenses too. That would be a far more convincing economic message than blaming the IMF every time another bill goes up.

Austerity commands respect only when it cuts both ways. People will accept sacrifice when those in power are seen making sacrifices too.

The views expressed here do not represent ProPakistani and its owners.

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