Pakistan has increased the carbon tax on petrol and diesel by Rs 5 per litre, raising the rate from Rs 2.5 to Rs 5. The tax also applies to high octane and furnace oil. To offset the increase, the government cut the petroleum levy by the same amount, so the net price at the pump did not change immediately. The real impact will be seen at the next price revision. This move comes after a recent Rs 74 per litre cut in petrol prices and Rs 67 per litre cut in diesel, which the prime minister attributed to improved regional stability and Pakistan's mediation efforts. The carbon tax hike is a small step toward pricing emissions, but the offsetting levy cut means the policy is revenue neutral for now. It remains to be seen whether the carbon tax will rise further or if the revenue will be directed toward clean energy investments.
