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

[WishLivePak]

Watching the news about new petrol price drop in Pakistan, people were complaining that such relief is not enough and is not on par per international price. So I did some search.

Our country is already running into many financial issues. Gov't already cannot collect enough taxes and whatever tax it could gather from petrol prices also seem to be falling (example, 5% on 70 rupees is lower unlike on 120 rupees).

Now take a look at South Asia, as it is a good comparison (many countries produce a lot of petrol and hence can sell it for cheap to its citizens). We have nearly the lowest price offered for petrol price. Yet, people still want a lower price. So do they want petrol free? Or for 1.61 rupees a litre like in Venezula or Syria?

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.

This amount can now be used to build new hospitals, roads, airports, pay off debt and whatnot. The Prime Minister has also said that since August 1, the people have received a relief of 400 billion rupees, or 4 billion dollars. Pakistan's current debt is 56 billion dollars and took a 6.6 billion dollars of loan from IMF 2 years back. We can instead pay off the loan, which will no longer devalue our currency like it did previously, boost investors views about stability of economy,

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.

Other nations in South Asia and across the world are thinking of increasing the price of oil (the ones that produce) and the ones that consume have set a high price, which is helping the government balance its budget out. Yet, Pakistan is failing.

Sources:

Gasoline prices around the world, 26-Jan-2015 | GlobalPetrolPrices.com (Notice that the price is dated Monday the 26th, so it won't show the new price of 70.xx rupees today.)

Record petrol imports in Jan - Newspaper - DAWN.COM

Convert Liters To Metric Tons - The Calculator Site

Petrol price cut by Rs 6.25, diesel by Rs 7.86 per litre

IMF Survey : Pakistan Gets $6.6 Billion Loan from IMF

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[WishLivePak]

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

 

[Sine Nomine]

Dear @WishLivePak Pakistanis as whole don't have enough money into Pockets so the things a person living in elite class can afford doesn't means they are cheap also all political parties are biggest tax robbers so if you start selling Petrol even at 10 RS liter and peoples only have 8RS in their pockets at end of Day then petrol is not cheap for them never compare your prices with China and India both countries have several chances of economic freedom for common man.In Pakistan peoples have got less chances of earning as compared to Chinese and Indians so comparing your prices with them is complete idiotic

 

[WishLivePak]

Dear @WishLivePak Pakistanis as whole don't have enough money into Pockets so the things a person living in elite class can afford doesn't means they are cheap also all political parties are biggest tax robbers so if you start selling Petrol even at 10 RS liter and peoples only have 8RS in their pockets at end of Day then petrol is not cheap for them never compare your prices with China and India both countries have several chances of economic freedom for common man.In Pakistan peoples have got less chances of earning as compared to Chinese and Indians so comparing your prices with them is complete idiotic

And did I not compare Afghanistan or Bangladesh? Did you manage to go into any of the link that I posted in sources and compare other countries? Pakistan is like top 10 for cheapest petrol. The world has some 200 countries. Does Pakistan fall into top 10 of poorest countries?

Pakistan isn't a subsidy state. There was no need to drop electricity tariff when it already has a huge circular debt.

So before calling my comparison idiotic, learn to read instead of cherry picking from what I've said.

 

[Jaanbaz]

Does Nawaz Sharif, Shahbaz Sharif, Asif Ali Zardari, Imran Khan, Shiekh Rasheed and Ishaq Dar pay taxes?

 

[WishLivePak]

Does Nawaz Sharif, Shahbaz Sharif, Asif Ali Zardari, Imran Khan, Shiekh Rasheed and Ishaq Dar pay taxes?

The point of the thread is to highlight the problem of self entitlement.

No society is a full tax paying one. In the US, companies and resients have off shore accounts. Same goes for other countries. The point was to highlight how much revenue the gov't could've made, like many other countries are doing, by not dropping the price so drastically. With the revenue, they could have built hospitals or energy infrastructures etc.

Finally, Zardari or Nawaz or anyone else have maybe 5 billion dollars. This does not mean they pay monthly tax of 100 million. Afterall, their income is mostly outside of Pakistan, where they pay tax on it. It is not sensible to pay tax in Pakistan and overseas (double taxation).

Anyway, again, the point was about the revenue from petrol. Let's not derail the thread.

 

[WAJsal]

For the very first time i will have to agree with you.The political parties will try to score points out of this,and the poor will get angry protest and maybe riots.The govt will never take such a step considering how stupid they are.So it don't think something like this will happen.

 

[kamrananvaar]

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

Totally agree with u . The govt does'nt have the balls to take decisions that need to b taken . The relief does'nt trickle down to the masses . Once petrol has reached a high , even if the govt lowers thetarrif , do u think public transport cuts prices accordingly . No thats not what happens . On fact tha only people to enjoy the lower price is usually tha CAR class as u say
this is just my observation , which might b wrong , so feel free to disagree

 

[WishLivePak]

Totally agree with u . The govt does'nt have the balls to take decisions that need to b taken . The relief does'nt trickle down to the masses . Once petrol has reached a high , even if the govt lowers thetarrif , do u think public transport cuts prices accordingly . No thats not what happens . On fact tha only people to enjoy the lower price is usually tha CAR class as u say
this is just my observation , which might b wrong , so feel free to disagree

Which is why I think there should be "no" decrease in oil prices. Because I've read that provincial gov'ts asked the public transport to lower the fare, but they would not listen. Al though there is some relief in bus fare, it isn't as close to how much they're saving.

In the west, they don't have loans problem or lack proper hospitals. Plus most of lower class have cars and those who don't ride in public transport, which is usually controlled by the gov't and when it is private, the gov't still has major influence. Like, it isn't that one guy and conductor start their single bus service, as is the case in Pakistan.

Thus, India made intelligent decision (even though their gov't control is better than ours) and with the surplus, they can improve the quality of life or purchase many military items. $4 billion and counting could've given us countless state of the art schools, hospitals and so forth.

The shukat khanum in Peshawar cost 64 crore I think and that's like $6.4 million. Now divide 4 billion by 6.4 million or 64 million, how many shukat khanums can be made in Pakistan?

For the very first time i will have to agree with you.The political parties will try to score points out of this,and the poor will get angry protest and maybe riots.The govt will never take such a step considering how stupid they are.So it don't think something like this will happen.

To some extent I blame IMran Khan, because his pressure made gov't lower price to save some face. Then the petrol shortage resulted in another face saving.

Even if Imran didn't exist or there was pressure from him, the gov't will still have lowered price (not as much) to hide their lack of development. It's nearly been two years and there hasn't been massive change so far, so petrol price drop I s the best they could offer.

 

[WAJsal]

To some extent I blame IMran Khan, because his pressure made gov't lower price to save some face. Then the petrol shortage resulted in another face saving.

Even if Imran didn't exist or there was pressure from him, the gov't will still have lowered price (not as much) to hide their lack of development. It's nearly been two years and there hasn't been massive change so far, so petrol price drop I s the best they could offer.

IK is to be blamed but there are other political parties too.To some extent prices should have been lowered.Your point is quite valid considering it would benefit Pakistanis.

 

[itachiii]

i don't think economy works this away , watever little a pakistani saves on the purchase of petrol , he spends this money on buying other regular commodities . so, effectively the amount still remains within pakistan , and as pakistanese spend this money in buying other goods , govt earns through the taxes that are levied on these goods.. effectively govt. is still making money through taxes on other goods..

my thoughts , i am no expert in these matters , so i might be wrong too..

 

[WishLivePak]

IK is to be blamed but there are other political parties too.To some extent prices should have been lowered.Your point is quite valid considering it would benefit Pakistanis.

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.

i don't think economy works this away , watever little a pakistani saves on the purchase of petrol , he spends this money on buying other regular commodities . so, effectively the amount still remains within pakistan , and as pakistanese spend this money in buying other goods , govt earns through the taxes that are levied on these goods.. effectively govt. is still making money through taxes on other goods..

my thoughts , i am no expert in these matters , so i might be wrong too..

Economy does work this way. WHateer the person saves, he spends on his necessities. THe money doesn't end up in gov't pocket. It can end up in foreigns hand or a company. But company or foreigners don't make the hospitals in Pakistan the way the gov't can. The company or foreigners don't pay off the debt of Pakistan the way gov't does.

Lets give you example. Person has 100 rupees. He can buy litre of petrol for 70 and for 30 rupees he can buy ipad or kilo of mangoes. Or he can buy petrol of 1 litre for entire 100 rupees. Now, in the first example, the 30 rupees will be taxed, but will gov't get all of the tax? Nope. American will get most of the money from ipad sale and a company in Pakistan will get the most from mangoes sale. The gov't may get 5 rupees of tax from it. But if gov't charge 100 rupees for litre, it gets entire 30 rupees of tax.

Above is just an example.

 

[Bagha]

One thing I don't understand is why the government charges a lot of tax on petrol items and then subsides them.
Why can't they tax a little less and forget subsidy. Subsidy is a vote gimmick.
One more correction petrol price in India currently is about 65 rs, it varies state wise.
Edit : As pointed out by @WishLivePak i got confuse by the word rupees , so my stated price will be much higher when converted to Pakistan currency.

 

[WishLivePak]

One thing I don't understand is why the government charges a lot of tax on petrol items and then subsides them.
Why can't they tax a little less and forget subsidy. Subsidy is a vote gimmick.
One more correction petrol price in India currently is about 65 rs, it varies state wise.

In indian rupees it is 65, but our rupee is weaker. Hence the converstion.

I suggest you edit your post and make the correction, otherwise people will read your post and skip mine and blame the gov't for not lowering price enough.

I think the gov't has stopped giving subsides on petrol. THey did before the election as price of oil was going high. Now they raised tax because they're not meeting the required amount of revenue they expected due to lower price of oil.

 

[truthseeker2010]

Watching the news about new petrol price drop in Pakistan, people were complaining that such relief is not enough and is not on par per international price. So I did some search.

Our country is already running into many financial issues. Gov't already cannot collect enough taxes and whatever tax it could gather from petrol prices also seem to be falling (example, 5% on 70 rupees is lower unlike on 120 rupees).

Now take a look at South Asia, as it is a good comparison (many countries produce a lot of petrol and hence can sell it for cheap to its citizens). We have nearly the lowest price offered for petrol price. Yet, people still want a lower price. So do they want petrol free? Or for 1.61 rupees a litre like in Venezula or Syria?

On the 26th, Pakistan was selling petrol for 78, India for 103, Afghanistan for 97, Bangladesh for 101, China for 107. 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.

This amount can now be used to build new hospitals, roads, airports, pay off debt and whatnot. The Prime Minister has also said that since August 1, the people have received a relief of 400 billion rupees, or 4 billion dollars. Pakistan's current debt is 56 billion dollars and took a 6.6 billion dollars of loan from IMF 2 years back. We can instead pay off the loan, which will no longer devalue our currency like it did previously, boost investors views about stability of economy,

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.

Other nations in South Asia and across the world are thinking of increasing the price of oil (the ones that produce) and the ones that consume have set a high price, which is helping the government balance its budget out. Yet, Pakistan is failing.

Sources:

Gasoline prices around the world, 26-Jan-2015 | GlobalPetrolPrices.com (Notice that the price is dated Monday the 26th, so it won't show the new price of 70.xx rupees today.)

Record petrol imports in Jan - Newspaper - DAWN.COM

Convert Liters To Metric Tons - The Calculator Site

Petrol price cut by Rs 6.25, diesel by Rs 7.86 per litre

IMF Survey : Pakistan Gets $6.6 Billion Loan from IMF

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.