Smuggling-prone items: LCCI urges government to curb menace by lowering duty tariff

Lahore Chamber of Commerce and Industry (LCCI) has urged the government to curb the menace of smuggling by lowering duty tariff on smuggling-prone items. LCCI President Sheikh Muhammad Arshad in a statement on Thursday said the smuggling has become a big threat for economic growth and any sector has hardly left untouched by this menace. He said the smuggled goods through the borders of Afghanistan, Iran, China, India and the Afghan Transit Trade form a chunk of the informal economy volume of which ranges between 50 to 60 percent of the formal economy.
Markets across the country are flooded with smuggled goods and local industries are struggling for survival as smuggled goods are not only easily available everywhere but are also attracting the buyers who prefer foreign merchandise, he said. LCCI president said that smuggling is being done in a number of shapes like under invoicing, undervaluation of goods, misclassifications, falsification of documents, mis-declaration of country and short landing transit or re-export of goods. "The causes of smuggling are actually the incentives which motivate people to engage in smuggling," he added.
Smuggling is also encouraged by the large tax rates difference between neighbouring countries. This means that goods are cheaper in one country than another, resulting in enactment of import duties to protect the local industries. This scenario encourages smuggling. Administration associated with the excise tax can also be complicated and costly, adding an extra burden on the importer. LCCI chief demanded of the government to review Afghan Transit Trade Agreement as it has become the main source of smuggling into Pakistan.
Its annual volume has been estimated at about US 5 to 6 billion dollars. Under the cover of Afghan Transit Trade, the Afghan imports are back smuggled into Pakistan with the help of Afghan traders. It has been estimated by the World Bank that from 2001 to 2009, total revenue loss due to smuggling in Afghan transit trade alone is $35 billion, he claimed. He suggested that in order to control the cross border smuggling, scanners should be installed at the border checkpoints and crackdown should be launched in the Bara markets. Once sale of smuggled goods is strictly prohibited, the incentive to engage in the smuggling would be minimised.
The consumer items should be divided into a number of categories. Specific FBR or Customs inspectors should be designated to look after each category, making sure that the products are distributed and sold only by registered companies. Using the data generated by the invoices and warranties of the registered companies, the officials will be able to make sure that only tax and Customs duty paid items are sold in all the shops, he maintained.