Pakistan petrol tax row continues

A lawyer has challenged in court the new petrol levy imposed by Pakistan's government on Thursday.

Advocate Shoaib Shahid argued that under the constitution Pakistan's president has no powers to impose taxes through an ordinance.

Correspondents say it is the latest move in a mounting row over oil prices.

On Thursday Pakistan introduced an ordinance imposing a petrol levy after the Supreme Court cut a carbon tax imposed by parliament last month.

The Supreme Court's ruling brought down oil prices by over 10 %.

But officials said the government would lose $1.52bn because of the tax cut.

President Asif Ali Zardari's ordinance introduced on Thursday effectively returned oil prices to their previous levels.

Prior to the court order, one litre of petrol was being sold at 62.13 rupees (77 US cents) and diesel at 78 cents.

Following the court order, petrol prices on Wednesday fell to 63 cents while that of diesel fell to 66 cents.

Officials said they feared the loss of revenue as a result of the court decision would increase the budget deficit beyond the limit approved by the International Monetary Fund (IMF), which is funding the Pakistani budget.

'Controversy'

Court officials say the petition may come up for hearing on Monday.

The legal challenge has deepened the controversy over petroleum prices, the BBC's M Ilyas Khan in Islamabad says.

Oil prices - fixed on 01 July through the finance bill for the year 2009-10 - were back to previous levels on Thursday in line with the presidential ordinance.

The row has left investors shocked and consumers furious.

It has also sparked a debate on whether the judiciary can intervene in legislative matters of parliament and aspects of the core financial policy through which the executive runs the affairs of the state., our correspondent says

The government in Pakistan is often criticised for relying heavily on indirect taxes which are easy to collect but are a burden on the poor.

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