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LAHORE: Advisor to Prime Minister and former governor SBP, Dr Ishrat Hussain at a session on illicit trade by the economists has said that the challenge of illicit trade is real which could be tackled through technology and digitization.

"There are different researches on the size of the illicit trade and cosmetic changes will not work," he said, adding: "This government has separated tax policy and administration to ensure that honest tax payers and legitimate industries are not burdened further and tax policy does not hurt the economy."

Dr Ishrat said that they are using NADRA and broadband penetration to integrate and chase people who are evading taxes. He said 75-percent of mobile phones were smuggled previously but with help of technology-based solutions we have completely eliminated it.

The CEO of Pakistan Business Council Ehsan Malik said that the biggest sufferer of illicit trade is a common man of Pakistan. Appreciating Pakistan's market he said despite all the challenges, opportunities outweigh the challenges. This is the reason the rate of growth of MNCs in Pakistan is about twice than the global rate, he added.

Talking about challenges he said among multiple factors, one of the significant one is high tax rates and that's coupled with a highly complicated system of tax collection. This is the reason there is a huge incentive to evade and demotivation to formalize.

The Managing Director PMI Roman Yazbeck said that in tobacco industry the legitimate, tax paying and regulated industry is losing to illicit trade year on year. Experts said illicit trade is 40 percent which can be an underestimate.

While commenting on the solution, he said, "Track and tracing system is the recipe. It has proven to be very effective and implemented in most countries. These are fiscal stamps to recognize every single pack and shipping case. This helps in tracing illegitimate production but also tracking and tracing the root cause of illicit trade."

Chief Operating Officer Draz Bjarke Mikklesen said that from an ecommerce point of view cash economy is contributing to insufficiencies. He said that digitalization and ecommerce is the solution. Presently he added huge amounts of smuggled goods coming to market from which the government is not able to collect taxes. It creates difficulty for legitimate sellers and businesses who pay taxes and hinder future growth, he added while appreciating that the state in general is taking the right steps towards solutions. However, he cautioned not to make the solutions too technical.

Copyright Business Recorder, 2020

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