Are Pakistanis' "self entitlement" problem ruining Pakistan's budget? Sell petrol for 2 rupee/litre

[graphican]

Nawaz is desperate to earn some credibility back after Imran Khan's street protests and then because of petrol/electricity issues. Country is already witnessing massive gas load-shedding and there is no gas to cook or heat anywhere in Punjab.

In this situation when militry has set its direction itself, Political base is slipping away as probes are happening into election and management/governance is hitting the bottom - what could a vision-less and support deprived leader do? It would cut the price to a point where it is appreciated by the masses and this is what Nawaz is trying to do - earn some credibility back.

If Nawaz government was running well, and if his freaking relatives were not looting the country that mercilessly, Pakistan could surely have saved money and spent where it needed.

Name an institution in the country and you will find it is empty and there is a moronic relative sitting on the top. This is what ROSHAN PAKISTAN looks like.

 

[WishLivePak]

you ignored diesel, in india diesel is very cheap compared to expensive petrol.... here diesel is expensive than petrol as diesel is used in heavy vehicles.

Diesel prices around the world, 26-Jan-2015 | GlobalPetrolPrices.com

Diesel here is only 2 rupee more expensive. You have to remember that Pakistan doesn't consume as much diesel as India, hence that may be the reason why it's expensive (transportation).

 

[Bagha]

Diesel has been kept cheap in India because it is directly related with food inflation.
If you rise diesel , the transportation price will increase.

 

[senses]

Honestly man, this was a golden opportunity which could have sorted pakistan out of all the problems, A perfect example of mismanagement.

 

[xyxmt]

Welcome to disagree with sources/knowledge. I'm not expert here but I did put some time down to search and write it out.

Its simple, revenues from sales tax on petrol was part of the budget income, if the price of oil goes down so does revenue and govt must recover those lost revenue in order to run the country...good or bad is another discussion.

 

[WAJsal]

I blamed everyone sir, read again. Also we don't know if it'll benefit Pakistanis. Lets say Nawaz decides to pay off the debt. The poor person won't know and blame gov't. But gov't can build 50 shukat kanums, which the poor, middle and upper person will know.

If I were in the position and I knew the selfishness of Pakistanis (not lowering bus tariff and pocketing profit, but quick to raise price when petrol gets expensive), I'd have not change the price a penny. Instead I'd have built some short term and long term projects. Build a few hospitals within a year, plan for university and so forth. The point is, show people that although they're not getting discount, at least their money is being spent on betterment of society. However, if there was no selfishness and I knew 100% that every drop in price will be passed on 100%, then I'd have given a relief of 10 rupees in total.

Such chances never come in years and gov't really missed it all out. $4 billion in a span of 10 months is a huge sum of money which could've changed face of many cities.

Well said.It was always going to be half a chance.The rest is quite well written and i have to agree with you .

 

[Faiez]

Its simple, revenues from sales tax on petrol was part of the budget income, if the price of oil goes down so does revenue and govt must recover those lost revenue in order to run the country...good or bad is another discussion.

OR the government can cut expenses on its most useless projects (and there's no shortage of them).

Now just imagine if we were to pay 100 rupees a litre for petrol (which, mind you, is still cheaper than many places in the world, including Canada which happens to produce a lot of oil). So we will have a number of 43,406,310,100 rupees, or 434,063,101 million dollars. This means we lose roughly 129 million dollars this month.

we didn't loose $129 million, we "gained" that amount when we spent less money on petrol. Now we have $129 million to spend elsewhere.

Then, the nation is already providing subsidy on electricity, since what they charge is lesser than what it costs to produce electricity. Yet, gov't is still providing relief and people are still complaining that such relief is not enough. This is also one reason on why we've circular debt. Gov't doesn't earn enough to pay back what it costs to produce, then the losses from theft and already federal, provincial and people owing billions of dollars to pay for the electricity bills.

Problem is price control. The price of each and every single commodity is controlled directly by the government and that causes all these problems. In a free market, government should have a minimal role, just maintaining law and order, not checking prices of aloo, matar, gajr etc..

 

[Imran Khan]

na shukri qaum

 

[xyxmt]

OR the government can cut expenses on its most useless projects (and there's no shortage of them).
.

Best practice would be to eliminate all the taxes and all projects.

 

[WishLivePak]

OR the government can cut expenses on its most useless projects (and there's no shortage of them).



we didn't loose $129 million, we "gained" that amount when we spent less money on petrol. Now we have $129 million to spend elsewhere.



Problem is price control. The price of each and every single commodity is controlled directly by the government and that causes all these problems. In a free market, government should have a minimal role, just maintaining law and order, not checking prices of aloo, matar, gajr etc..

The middle and upper class has most of that 129 millions, not lower class. If the gov't received 129 millions, then every class will reap benefits.

Price controlled by gov't is not enforced in Pakistan. Have bus fares dropped the same way petrol prices dropped?

Finally, many things gov't can do for budget and what not. Point of the thread is this opportunity the gov't forgo which other countries are using smartly.

Its simple, revenues from sales tax on petrol was part of the budget income, if the price of oil goes down so does revenue and govt must recover those lost revenue in order to run the country...good or bad is another discussion.

Yeah I said that somewhere in the thread.

 

[SouI]

On the 26th, Pakistan was selling petrol for 78, India for 103, Afghanistan for 97, Bangladesh for 101, China for 107. The average price in world is 105 rupees. Yet the gov't has decided to offer some 8 rupees of additional relief. Pakistan will import 320,000 tonnes of petrol for upcoming month. This means, Pakistan imports some 434,063,101, or 434 million litres of petrol. We're ignoring the some 4,500 petrol that Pakistan produces itself. So, the number 434 * 70.29 gives us 30,510,295,369 rupees, or 305,102,954 million dollars.

Now just imagine if we were to pay 100 rupees a litre for petrol (which, mind you, is still cheaper than many places in the world, including Canada which happens to produce a lot of oil). So we will have a number of 43,406,310,100 rupees, or 434,063,101 million dollars. This means we lose roughly 129 million dollars this month.

It works the other way around. If you want to revive an economy, it is one of the best ways to reduce the price of oil. You can always collect that 'lost' money by some other way anyway.

Fiscal policy is nothing but controlling the circulation of the money in the economy (both the state and private sectors).

State sucks money from economy by collecting taxes or capitalization, and then gives it back to the economy by buying products or give tax breaks for some sectors for more investment etc.

Faster the money travels around, better the economy gets. The total amount of money that travels between the state and the private sectors is also important. If it is too low, then the economy would not feel the supposedly positive impacts of state controlled fiscal policies.

 

[WishLivePak]

It works the other way around. If you want to revive an economy, it is one of the best ways to reduce the price of oil. You can always collect that 'lost' money by some other way anyway.

Fiscal policy is nothing but controlling the circulation of the money in the economy (both the state and private sectors).

State sucks money from economy by collecting money or capitalization, and then gives it back to the economy by buying products or give tax breaks for some sectors for more investment etc.

Faster the money travels around, the better the economy gets. The total amount of money that travels between the state and the private sectors are also important. If it is too low, then the economy would not feel the supposedly positive impacts of state controlled fiscal policies.

What you said is true but it works best for economies that aren't in bad shape like pakistan. We've to beg to take loans and run pakistan.

If I'm wrong, why neighbouring countries didn't drop price the way Pakistan did. Surely their economy would've improved too.

 

[SouI]

What you said is true but it works best for economies that aren't in bad shape like pakistan. We've to beg to take loans and run pakistan.

If I'm wrong, why neighbouring countries didn't drop price the way Pakistan did. Surely their economy would've improved too.

I don't know the conditions of those countries, neither that of Pakistan :p

But again, the state can always get that money by some other way if needed. Say like, state used to get 10% out of every liter of oil.

And it then reduced this tax to 5%. That caused a general drop in inflation and thus more products are led to be bought, lets say the economy got faster by 2%.

If lets say an ordinary person buys 100 products every month, increasing the tax of the product by, lets say, 0.5% would make the state earn more than it would by just collecting more taxes via oil.

So yeah, in this case the state must know what it is doing. Things like reducing the oil tax is not a very simple decision to take.

 

[WishLivePak]

I don't know the conditions of those countries, neither that of Pakistan :p

But again, the state can always get that money by some other way if needed. Say like, state used to get 10% out of every liter of oil.

And it then reduced this tax to 5%. That caused a general drop in inflation and thus more products are led to be bought, lets say the economy got faster by 2%.

If lets say an ordinary person buys 100 products every month, increasing the tax of the product by, lets say, 0.5% would make the state earn more than it would by just collecting more taxes via oil.

So yeah, in this case the state must know what it is doing. Things like reducing the oil tax is not a very simple decision to take.

If they build hospitals with $4 billion, they can get it back more. Doctors nurses will pay taxes, there will be new jobs creation etc.

Take a look at Canada action plan, which is what gov't did during recession.

 

[BetterPakistan]

The govt increased GST on petrol because govt don't want to have loss of some billions because of decreasing petrol prices but when Petrol price was increasing did the govt reduced GST saying that "Petrol prices are increasing, revenue from GST has increased that's why we are reducing GST to facilitate poor Pakistanis"

A simple thing to keep in my mind is that why don't govt collect Income taxes from rich? why govt always put burden on the poor?