ISLAMABAD: The federal government is considering imposing a carbon levy on vehicles powered by petrol and diesel as part of its proposed Budget 2026-27 measures aimed at promoting environmentally friendly transportation.
According to budget proposals, the government plans to introduce incentives and tax relief for electric vehicles (EVs), while increasing financial pressure on conventional fossil fuel-powered vehicles through a new carbon levy mechanism.
The proposed move is part of a broader policy package designed to encourage the adoption of clean energy vehicles and reduce carbon emissions in the country.
Officials say locally manufactured electric vehicles are expected to become more affordable under the new incentives, while larger conventional vehicles may become significantly more expensive due to the additional levy.
The budget proposals also suggest tax concessions for eco-friendly EVs, whereas hybrid vehicles are likely to continue under the existing taxation structure without major changes.
The government believes the policy will help accelerate Pakistan’s transition towards sustainable transport and support long-term environmental goals.
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