Higher duties, taxes increase illicit trade of smuggling: Senate body informed

The Federal Board of Revenue (FBR) accepted on Thursday that customs officials have been unable to effectively deal with the smuggling taking place from Afghanistan to Pakistan owing to limited resources and shortage of manpower in customs intelligence.

Dr Ahmed Mujtaba Memon, Additional Secretary Finance Division, during a meeting of the Senate Standing Committee on Finance chaired by Farooq H Naek, stated that higher duties and taxes increase illicit trade of smuggling-prone items in the country. The committee was briefed on agenda item of smuggling of LED TVs and Memon stated that due to revenue target assigned to the FBR, decrease in taxes is not possible. He stated that "holistically all efforts are being made with limited resources to overcome the problem."

Senior officials of customs intelligence, when asked by the chairman of the committee whether smuggling is taking place, admitted that "smuggling is taking place from Afghanistan to Pakistan" and added that there four points - Kharlachi, Ghulam Khan, Torkham and Chaman - where customs officials have been deployed whereas rest of the border could not be catered for owing to shortage of manpower. They added that successive governments were requested to provide resources to strengthen the force of customs but regretted that requests have not yielded any result.

Now the present government convened a meeting four months ago on the issue of smuggling and subsequently an anti-smuggling committee (ASC) was formed whose recommendations are perhaps now reached the Prime Minister Office. Meanwhile, other law enforcement agencies - FC, Coastal Guards, Maritime, Rangers - were given powers to deal with the smuggling.

The committee remarked that despite all these agencies working to deal with the smuggling, smuggling has not being stopped. The government is aware of the fact but is doing nothing to deal with the menace.

The officials of customs intelligence said that situation has improved at Torkham border after fencing.

The committee members said that smuggling as alternate option for employment in Balochistan is getting acceptance while Senator Shibli Faraz said it could not be stopped because customs officials are drawing incentives from smuggling. There seems no institutional will to overcome this challenge, he added and described those involved in this practice as 'economic terrorists' and are dangerous for the economy and industry.

He said the country can not afford smuggling and urged the Federal Board of Revenue to bring a comprehensive plan to deal with the challenge. He said if there was will at the institutional level, the IT smuggling of $400-500 million taking place under the nose of customs intelligence could have been stopped, which is causing Rs 8 billion loss to the exchequer.

The committee expressed displeasure over the absence of Adviser to Prime Minister on Finance Abdul Hafeez Shaikh and Chairman Federal Board of Revenue Syed Shabbar Zaidi from the meeting and asked the officials of Finance Ministry present in the meeting to convey to them to ensure their presence in the next meeting to respond to the questions of members on smuggling and about measures being taken to deal with it.

After the committee was informed that the adviser and FBR chairman are in an important meeting on the economic situation with Prime Minister Imran Khan, Farooq H Naek said, "This has become their regular excuse" and state that perhaps they think that the Parliament and committees have no value. He acknowledged that former finance minister Asad Umar had always shown respect to the committee and was always available for briefing.

On the issue of imposing customs duty on mobile phones with reference to overseas Pakistan at the time of registration, the chief tariff of FBR stated that sufficient time was given to the users of unregistered phones to get them registered. He said that there were two issues including smuggled phones and their usage, and the government made a policy that every phone would be registered. The meeting was informed that during the last eight months Rs 7 billion tax was collected from imported mobile phones and now some companies are also showing interest to make investment for mobile phone manufacturing in Pakistan.

Copyright Business Recorder, 2019