FBR taking steps to tax underground economy

The Federal Board of Revenue is taking administrative and enforcement measures to tax the underground economy, curb under-invoicing and check the menace of smuggling. Sources told Business Recorder here on Wednesday that the FBR has forwarded its comments to the Prime Minister's Secretariat on the observations of the M/s Atlas Group, Karachi to improve economic situation of the country.
M/s Atlas Group in its letter has raised the issue that taxing the underground economy will reinforce investment, production and export-globalisation - creating employment thus providing bread, clothing and shelter - promised to the masses- not globalisation that serves global interests. It will enable also much sought after access to the developed world based on outright merit.
On the issue of aid, loans and credit, the group said that the approach will add intrinsic value, which has always been deprived through so-called aid, loans and credits from the donors for import from them and payable against recipients export earnings. The developing countries and Pakistan, in particular, may realise this phenomena and thus sooner the better. In that lies self-reliance.
The donors too, have started emphasising on the aid recipients to rely, first, on their own resources. With the highest-ever foreign exchange reserves now of $17.5 billion, with the surplus current account during the July-December 2010 period against deficit in the same period a year ago, perhaps, Pakistan can make a beginning - with socio-politico-economic harmony.
The import from some countries are heavily under-invoiced not only avoiding customs duty but also sales tax at a heavy cost to the exchequer - some projects not even properly sanctioned. The talk of new entrants - autos - in particular - at concession, if not outright zero duty will affect the existing industry unless they are also given the same concession - level playing field. In that case, there will be no manufacturing - only assembly at the cost of investment, production and export depriving GDP growth (already relatively low - at 5 percent particularly compared with neighbouring India - and Malaysia about 10 percent - vide annexure - employment and foreign exchange earnings. Will this help the economy? Revival of bureaucratic specialist role coupled with political generalist role as it used to be guiding principle, for long will definitely help.
The group added that the developing countries thus and for that matter, Pakistan will have to be guided by their national interests in following any policy emanating from external factors. Responding to the letter, the FBR stated that the tax authorities have taken measures to tax the under ground economy, curb the under invoicing and to thwart the smuggling. This will ultimately result into the globalisation. The duty on the import of automobile has not been reduced, the FBR added.