We will make a case for targeted LPG subsidies for poor consumers by waiving or reducing some taxes including the petroleum levy and GST or by introducing cross-subsidies. Currently, there is a direct bank transfer of LPG subsidy into accounts of eligible registered LPG consumers. In January 2020, the LPG cylinder price for targeted customers was INR530 as opposed to INR714 per cylinder of 14.2 kg. Applying the formula of 4% limit on cooking fuel expense and assuming average income of PKR15,000 per month, and assuming that one LPG cylinder is required per month by poor households, the LPG cylinder price in Pakistan should not exceed Rs600. An alternative is to pass on the benefit created by the tax waiver to eligible poor LPG consumers only.

Source: The Express Tribune April 06, 2020 02:37 UTC