ISLAMABAD: A parliamentary committee on Saturday expressed concerns over the proposed carbon levy, warning that lowering customs duties on imported scrap could pose environmental risks, while also approving an increase in Islamabad’s token tax that is expected to affect middle-class vehicle owners.
The National Assembly Standing Committee on Finance and Revenue conducted a detailed review of the National Tariff Policy 2025-30, focusing on the government’s plan for phased reductions in import duties. During the meeting, lawmakers directed tax authorities to redraft the proposed climate levy, insisting that it should be linked to a clearly defined purpose and objective.
Commerce Secretary Jawad Paul briefed the committee on the tariff policy, while Commerce Minister Jam Kamal did not attend the meeting.
Chaired by MNA Naveed Qamar, the committee continued its clause-by-clause scrutiny of the Finance Bill. Members noted that the committee had held 12 meetings last year to review budget-related legislation.
The committee discussed the petroleum levy and the newly proposed climate support levy amid concerns about Pakistan’s commitments under the IMF’s climate resilience framework. Lawmakers questioned the rationale for collecting a carbon support levy from citizens in the absence of visible climate-related projects.
Finance Secretary Imdad Ullah Bosal informed members that Pakistan had signed an agreement with the IMF under its climate resilience programme.
However, committee chairman Naveed Qamar criticised the government’s performance, arguing that levies were being collected without translating them into practical climate initiatives. He warned that such an approach could damage Pakistan’s credibility and reputation.
“You take money from the IMF, impose levies, but start no projects,” Mr Qamar remarked, urging officials to present evidence of at least one climate-related project being implemented under the programme.
Officials briefed the committee on steps taken under the IMF’s Resilience and Sustainability Facility (RSF). Mr Qamar dismissed the measures as insufficient, saying the government was paying “lip service” to climate action while pursuing policies that contradicted its stated commitments.
“It is not acceptable that money comes from the IMF and is simply consumed without projects. This is a complete failure,” he said.
PPP MNA Hina Rabbani Khar recalled that Pakistan had once been recognised internationally for its leadership on climate issues but had gradually lost that position. She urged the government to regain its standing, noting that Pakistan remained among the countries most vulnerable to climate change and environmental disasters.
The committee also reviewed proposed amendments to the Petroleum Products (Petroleum Levy) Ordinance, 1961, particularly provisions aimed at improving enforcement against defaulting oil marketing companies.
Mr Qamar observed that oil marketing companies merely collected government levies on behalf of the state and should not be allowed to retain public funds.
Expressing concern over delays in levy recovery, he directed the government to introduce a strict enforcement mechanism requiring the suspension of fuel supplies to any oil marketing company that failed to pay levies within 30 days. He also called for the removal of discretionary extensions and instalment facilities that, in his view, weakened compliance.
The chairman instructed the Petroleum Division to redraft the amendments to ensure that instalment options for defaulting companies were eliminated and supply suspensions were imposed immediately after the prescribed period.
Duty on scrap and waste
The committee rejected a proposal to reduce customs duty on imported scrap and waste from 20 per cent to 10 per cent, deciding to retain the existing rate.
Commerce Secretary Jawad Paul explained that some industries imported waste for conversion into fuel. However, PPP lawmaker Nafisa Shah questioned the policy, asking why Pakistan, which already generated large quantities of domestic waste, could not use local resources for fuel production.
MNA Arshad Abdullah Vohra noted that Karachi alone produced around 25,000 tonnes of waste each day. In response, the commerce secretary said Pakistan currently lacked the necessary machinery to convert waste into fuel and added that most imported waste was used in industrial furnaces.
The committee also strongly opposed tariff concessions on environmentally hazardous imports, including shredded tyres, arguing that such incentives conflicted with Pakistan’s climate commitments and discouraged domestic recycling efforts.
Islamabad token tax
Following detailed deliberations, the committee approved an increase in token tax on vehicles registered in Islamabad.
Islamabad Deputy Commissioner Irfan Nawaz Memon told the committee that token tax rates had remained unchanged since 2019, whereas all provinces had revised their rates upward during the same period.
Under the revised structure, a one-time fixed tax of Rs10,000 will apply to vehicles with engine capacities of up to 1,000cc. For vehicles manufactured before 2010, the tax will rise to Rs20,000.
For vehicles between 1,000cc and 1,300cc, the token tax rate, currently set at 0.3 per cent of the invoice value, will be adjusted to 0.25 per cent. The change will result in a tax of Rs2,500 for pre-2010 models and Rs6,200 for post-2010 models, compared to the previous rate of Rs1,500. A vehicle valued at Rs2 million, for example, will be subject to a token tax of Rs6,200.
Several committee members expressed concern over the financial burden the increase could place on middle-income households. PPP MNA Sharmila Faruqi opposed the proposal, arguing that the majority of vehicle owners affected by the tax belonged to the middle class.