Lahore (May 7, 2020): The legal commercial import has been facing a serious threat of smuggling, forcing the documented sector of the country towards under-invoicing. So, there is strong need to improvise laws of Afghan Transit Trade and FTA, especially with China for high economic growth.
These views were expressed by the PIAF senior leader Engr. Sheikh Sajjad Afzal, suggesting the government to take stern measures to control such kinds of trade misconduct.
He called for strict measures to stop illegal trade, as the smuggling is not only causing massive shortfall in revenue collection but also discouraging the legal businesses and documented economy. “Majority of the people don’t want to get them registered and preferred purchasing of smuggled goods mainly due to high duties/ Tariffs on legal import, besides the benefits of no invoice, no record and no audit.” There is cost difference of around 50 percent between smuggled and legally imported goods.
The PIAF leader, who is also LCCI EC member, said that it would only yield results when stringent measures will be taken at four borders along with Iran and Afghanistan to curb smuggling in cooperation with customs, Rangers, coastal guards and armed forces of Pakistan.
Under this catastrophic situation a country can stand only if it has high tax base, strong industrial backbone and implementation of laws of ease of doing business like China. Previous governments emphasized in imports and never concentrated on first two areas.
“If we make a control on smuggling, non-availability of material through this source, it will force everyone to register themselves because investor certainly chooses legal option.” Moreover, details study of the sector should be conducted through associations of the related sector, improvising the data of its manufacturing and capacity, he added. This will help in making decision of what to import and what is the manufacturing capacity. The tariff decisions and FTA’s with China are made on this hypothesis. “Until and unless we don’t have major data, haphazard decisions will only ruin the local business.”
He said that present government should not be blamed for everything as the path, which has been adopted for the last several decades, cannot be changed at once. “Today, commercial importers can help in easing out from this epidemic by importing emergency relief medical assistance but hurdles in the form of unnecessary laws have been made in this regard. Laws are different for those who are well connected. When things are in control of certain elements, these factors create hoarding. Hence, delay in proper policy making, anything going wrong is like sugar decease which is a silent killer. Smuggling is silent killer of economy.”
Further effect is that, Pakistan tax-to-GDP ratio is very low and due to lack of policy, the government is mainly responsible for this, as its tax machinery creates harassment among businessmen, discouraging those who are already registered. In this situation how unregistered businessmen will take a risk to get registered themselves, as without taking these headaches they are earning more in this way.
In this complex situation a large number of taxpayers who want to adopt right track cannot do this and everyone has to be dependent on smuggled item, directly or in directly. Government needs to show seriousness in this matter.
