Rs 14 billion loss to exchequer 0.11 million tons of tea smuggled through ATT

The unabated smuggling of tea, estimated at 110,000 tons, in the guise of Afghan Transit Trade (ATT), is causing about Rs 14 billion to the public exchequer annually, besides impeding the business of genuine and legitimate importers/companies.
Pakistan consumes 200,000 tons tea, out of which 60 percent--120,000 tons--is smuggled through Afghan Transit Trade, while marketing of unpacked tea is also depriving the government of huge amount on account of different taxes including the general sales tax, sources told Business Recorder here on Friday.
It is pertinent to mention that the Afghan people usually do not use black tea, and consume only green tea or "Qahva". Thus, there is no justification of the import of black tea under the ATT. All imported consignments of tea are smuggled back into Pakistan, sources said, and demanded of the government to revisit the items' list under the Afghan Transit Trade. Sources expressed fear that smuggling of a large number of consumer goods, including eatable items, machinery, cigarette, electronics, tubes and tyres and cosmetics, would continue, as the government, being signatory of international treaty and conventions, may not be in a position to put either qualitative or quantitative restrictions on ATT. Because of high incentive to evade government levies, Iran could also be a source of smuggling, sources added.
The genuine and legitimate importers have to pay import duty and sales tax on tea amounting to Rs 116,000 per ton. On the other hand, the unscrupulous elements involved in smuggling are enjoying a high difference of Rs 90,000 (per ton) after paying facilitation cost of Rs 25000-30,000 per ton to those responsible for checking illegal trade.
Sources were of the view that if the government reduces levies to Rs 40,000 per ton on tea, for instance, it would help get rid of menace of smuggling, as there would be no incentive to evade for them. Besides, the government revenue from the much larger formal sector will not only revert to the current level but would go up also. Moreover, the prices to the consumers (presently 50 percent higher than in India) will automatically be declined besides discouraging adulteration that occurs frequently with smuggled tea sold through open sacks, the sources adding it would provide a level playing field to all.
While the law exists to control counterfeiting, enforcement is patchy and ineffective, particularly as prosecution lacks commitment. As a result, there are few convictions. The entire markets in some large cities like Shah Alam Market in Lahore openly deal in counterfeit and smuggled goods. There are serious health concerns in tea and carbonated drinks because counterfeiting is rife in personal products.
Sources further said that consumer courts have been set up in Punjab to deal with the related issues and demanded of the government to also establish similar consumer courts in other provinces. With a view to check counterfeiting in the country, the aggrieved businessmen should be allowed to become interest parties in the case.
The Competition Commission of Pakistan has also been briefed on the issue with a request to play its due to role in this regard and ensure level playing field to all the businessmen.