Pakistan pushed back on Friday against the International Monetary Fund (IMF )’s requirement to impose a carbon tax on petroleum products, coal and internal combustion motor cars that the global lender advocates to deter the use of fossil fuels.

The IMF has suggested that the existing petroleum tax be increased from RS60 per year. Liter for RS70 per Liters over three years, starting with RS3 per Liter in the first year, according to government sources. The extra income generated from Levy can be used for activities to promote green energy, according to the proposal.

Sources said the IMF also wants the existing federal excise duty rates on the internal combustion engine (ICE) cars to be increased where the extra duty is treated as a carbon tax.

Discussions were held on Friday between an IMF team and Pakistani officials from the Ministry of Oil, the Ministry of Finance, climate change, the Ministry of Industries and the Federal Board of Revenue.

On the same day, the government Ali Pervaiz Malik appointed the new Petroleum Minister, while his predecessor, Dr. Musadiq Malik, was appointed Minister of Climate Change.

Sources said that Pakistani authorities were not susceptible to the IMF’s demand and raised concerns about the use of funds generated in the name of climate protection, as well as the Federation Provincial Questions.

There was also concern about introducing a carbon tax on coal falling under provincial jurisdiction, they added.

Unlike a tax shared with the provinces under the National Finance Commission, collections remain from a tax outside the distributed pool. However, in the case of a carbon tax, half of the revenue must be allocated to the provinces, according to sources.

Sources also said that FBR supported the proposal to increase the federal excise rates on cars. Cars in Pakistan are already taxed strongly, with taxation accounting for 36% to 45% of the total price, depending on the variant.

The government is currently imposing advances on income tax, VAT, federal excise duty and heavy registration fees on new cars.

The IMF had also raised the issue of a carbon tax last month during the negotiations on Resilience and Sustainability Facility (RSF), an IMF-locking package designed to support the climate climate-vulnerable Nations. Pakistan is looking for over $ 1 billion from the IMF during this facility.

Finance Minister Muhammad Aurangzeb stated this week that payments under RSF will be linked to actual climate -related expenses from the country.

One of the resistance conditions is the introduction of a carbon tax that lenders want Pakistan to use for internal combustion motor cars and fossil fuels.

According to government estimates, 10% of the total carbon dioxide emissions originate from the transport sector, and a shift to cleaner vehicle sources requires massive financing and efforts.

Engineering Development Board is finishing a five-year New-Energy Varkices (NEVS) policy. The Ministry’s original estimates indicate that Pakistan needs at least RS155 billion in additional financing by 2030 to replace internal combustion motor cars and motorcycles with pure fuel -based alternatives.

Almost 80% of Pakistan’s imported oil is consumed by the transport sector. Conversion to cleaner energy vehicles could save currency reserves, but the transition is expensive and will require subsidies to lower vehicle costs and promote new infrastructure, including tax exemptions and concessions, sources say.

The IMF’s proposal suggests that the carbon tax revenue should be used to offset the high cost of two-wheel and tricycle.

According to Engineering Development Board, traditional two-wheeled motorcycles are up to 100% cheaper than two-energy two-wheeled ones, while three-energy three-wheels are up to 123% more expensive.

Prime Minister Shehbaz Sharif’s government aims to ensure that up to 90% of new purchases of two- and tricycles are based on renewable energy sources by 2030.

New technology -based four -wheeled cars are estimated to be 65% more expensive than combustion motor vehicles. The government is aiming for at least 30% of the purchase of new cars by 2030 to be based on new technologies, sources say.

According to the World Bank, a carbon tax can be beneficial for Pakistan’s development from several perspectives. Pakistan imports almost one -third of its energy in the form of oil, coal and re -fried liquid natural gas (RLNG) to huge costs, which contributes significantly to the country’s chronic tax stress, it added.

Pakistan recently signed an agreement of $ 1.2 billion to buy Saudi oil on deferred payments. The facility was secured to meet the needs of the balance of payments and will be used to buy Saudi oil.

The government also plans to introduce national vehicle emissions efficiency standards aimed at promoting newer, more efficient vehicles.