The phenomenal increase in gasoline prices

A fresh bout of inflation has already been initiated by a massive spike at fuel prices. 

The public's displeasure over the recent increase in gasoline and diesel prices in the United States is understandable.

The meteoric rise in fuel prices has already launched a new cycle of inflation, driving up the cost of transportation, food, clothes, and other essentials, and placing people under even more financial duress.

The public outrage over increased gasoline prices has been so intense that even the Pakistan Tehreek-e-Insaf (PTI) government's supporters have been obliged to demand that the hike be reversed immediately.

The PTI's response to the outpouring of anger over the hefty raise displays insensitivity and disinterest for the vast majority of families already struggling to make ends meet.

Other ministers blame the increase in local gasoline costs on rising global oil prices.

True, rather than anything beyond the government's control, geopolitical factors such as Russia's military buildup near Ukraine have propelled the present spike in gasoline costs this year.

As of February 23, Brent crude prices are reaching $97 per barrel. The ruling party, on the other hand, cannot entirely blame global markets for motorists' misery at the pump.

In addition to rising worldwide oil costs, new data from the Federal Board of Revenue (FBR) shows that higher taxes on petroleum commodities is another important factor pushing up local gasoline prices.

According to a media source, the FBR received Rs287 billion in indirect taxes from petroleum goods from January to July of fiscal year 2021-22, rising 72 percent over the previous year.

Without a doubt, the government has given the people some respite by forsaking a portion of their tax collection on petroleum items while keeping the overall sales tax same.

However, it has imposed a 17 percent sales tax on crude oil imports and raised the customs fee to 10%.

The government and the International Monetary Fund (IMF) have also agreed to boost the gasoline levy by Rs4 per litre every month until it reaches the Rs30 mark. Petroleum product taxes now account for 8.5 percent of FBR income, up from 6.5 percent last year, indicating that they remain a substantial revenue stream.

Without a sure, it is a difficult situation, not just for the public, but also for the government, since rising world prices and rising oil imports put a strain on our meager foreign exchange reserves.

Nonetheless, the government should explore decreasing petroleum-related taxes even more to bring some relief to inflation-stricken households.

It must also require oil marketing companies who import the bulk of their motor gasoline stocks duty-free from China under the Free Trade Agreement to pass along at least half of the tax savings to their consumers.