ISLAMABAD: The Pakistan Petroleum Dealers Association (PPDA) have announced it would close petrol pumps across the country on July 5 to protest the government’s decision to impose an advance tax on turnover, saying the move would “devastate” their businesses already reeling from high taxes and inflation. 

Petroleum dealers in Pakistan are demanding the government withdraw an advance income tax of 0.5 percent imposed in the recently passed federal budget 2024-25.

Pakistan’s tax-heavy $67.76 billion budget for the new fiscal year came into effect on Monday amid an annual inflation projection of up to 13.5 percent for June. The ambitious budget with a challenging tax revenue target of Rs13 trillion ($46.66 billion) has drawn the ire of the government’s allies and opposition alike. The revenue collection target for the new fiscal year is almost 40 percent higher than the last fiscal year. 

The PPDA says its members are earning minimal profit due to staggering inflation and high taxes. Talks between the government and the association this week failed to break the deadlock between the two sides. 

“We are going on a nationwide strike starting July 5 and plan to close petrol pumps across the country,” PPDA Chairman Abdul Sami Khan told Arab News on Wednesday. 

“Our demand is simple: the government should immediately withdraw the advance tax decision.”

Khan said the move would “devastate” the petrol pump business in the country, adding that dealers would be left with no other option but to wind up their businesses for good if the government does not reverse its decision.

“We are ready to discuss our concerns and possible solutions with the government,” Khan said. “We request the prime minister, petroleum minister and finance minister to immediately abolish this tax, otherwise we will be unable to continue running our businesses.”

Imran Ahmed, the director general of oil at Pakistan’s petroleum ministry, rejected the strike call. He said the government would not entertain “blackmailing tactics” but was willing to discuss petroleum dealers’ genuine concerns. 

“We will not support the strike or such tactics,” he told Arab News. “This new advance tax applies to all traders, not only petroleum dealers.”

Ahmed said the government is in talks with the dealers and their representatives, whom he said have also met officials of the Federal Board of Revenue (FBR), Pakistan’s tax authority. 

He said the ministry has instructed oil marketing companies to keep as many sites open as possible to ensure a smooth supply of petroleum products in the country. 

“We have also instructed PSO [Pakistan State Oil] to ensure maximum supply and storage of petroleum products by keeping their sites open,” Ahmed said.