Karachi, March 12, 2021: The Stop Legal Trade (SIT), an advisory forum for the prevention of illicit trade in the country, has urged the FBR and relevant government agencies to accelerate the efforts of curbing illicit trade so that the financial capacity of the government can be enhanced.
In a statement, the SIT spokesperson lauded the efforts of Prime Minister Imran Khan and his economic team to increase the tax net and improve the tax-to-GDP ratio, while adding that tapping illicit sector and illegal trade can open a crucial revenue stream without burdening the documented sector and general public further.
Despite the best efforts of the government’s economic team so far, the tax-to-GDP ratio has not increased. According to the FBR’s Revenue Division’s Year Book 2019-20, the tax-to-GDP ratio was limited to 9.6%, lower than the expected 10.9 percent. It was the lowest tax-to-GDP ratio in Pakistan’s history.
Spokesperson SIT, Amna Saleem said that in the current scenario, the country’s economy could not afford such a huge leakage of revenue, especially when the country is facing the serious economic and social challenges posed by the Covid-19 pandemic.
Identifying one of such sectors, Amna said that only countering illicit trade of cigarettes causes loss of Rs. 44bn annually. While, a report presented by the FBR at a cabinet meeting chaired by the Prime Minister last month said that cigarette smuggling is causing an annual deficit of Rs 140 billion.
“This depicts the status of opportunity lost every year due to illegal trade in just one sector,” she added.
These resources could help strengthen the social sector, especially in reducing the pressure on the public health care system raised by the pandemic.
The SIT spokesman said that although authorities are doing a commendable job to counter illicit trade, it requires urgent and strict enforcement. “We have to declare a state of emergency against illegal trade and take initiatives on war footings against it,” she added.
“The scope of the crackdown should be extended to factories, warehouses, stocks and distributors, distributors and wholesalers as well as retailers,” she reasoned.
The spokesman also stressed the need for swift adoption and implementation of the track and trace system to curb the illicit trade, which would not only help strengthen the document economy but also safeguard the interests of legitimate tobacco business in the country.