The local tyre industry has exhorted the government to take steps to curb the menace of smuggling and address the import trade price (ITP) values that will help government in building documented economy and curbing evasion of taxes. "The FBR should make sure that no tyres without documents are sold in the market. It should raid markets and seize tyres whose dealers cannot show papers for smuggled tyres," market sources said.
"The government should re-evaluate the data of items being imported via the Afghan Transit Trade (ATT) and see if the numbers of tyres being imported are supported by the vehicle population in Afghanistan. Items under the guise of ATT are either unloaded in Karachi or come back from the Afghan border via smuggling. This needs to be addressed and customs department needs to ensure that this facility is not misused," the sources added.
Similarly, a large number of tyres are being reported to be smuggled from Iran. The government should ensure that these smuggled tyres don't come in through Iran border to check post at Taftan, the sources said, adding: "As far as ITP values are concerned, now time has come that GOP should ask Chinese authority to exchange the trade data so that anomalies can be stopped. This will provide level playing field and as a result fair competition will take place and the ultimate beneficiary would be the consumer."
The sooner the government starts its campaign to document the economy and revisit the ITPs, better it will be. These measures will categorically help government to prosper and increase its revenue by supporting its local industry to flourish, the sources said, adding: "Another area which we believe to be highlighted also is the unjustified ITP (Import Trade Price) of tyres being imported into Pakistan. The import trade prices have never reflected the true nature of the C&F prices that actually exist. Local tyre industry has been fighting for years to rectify this anomaly."
The sources highlighted that it is interesting to note that Chinese tyres are 70 percent of the total imports in Pakistan and it is estimated that these Chinese tyres are more than 50pc-60pc under-invoiced. Thus robbing the government of its legitimate dues and affecting the local tyre industry to the extent of its survival. Therefore, it is imperative to revisit the ITPs to support local industry.
The sources said the solution here is in proper documentation of the economy. This task will be time consuming even if proper efforts are now taken in hand. We need to have a law that makes it compulsory for all importers, manufacturers, wholesalers and retailers to start issuing proper sales invoices which gives complete details. Lack of documentation is the main malaise in our economy. Except for a few multinationals and some progressive local companies there is no proper documentation in the purchase, import and sale of goods and services. This lack of proper documentation leads to: Evasion of taxes, both sales tax as well as Income tax; under invoicing results in lower collection of duty/taxes; Outflow of our foreign exchange to finance under invoicing; massive use of black money with no accountability; lack of level playing field for existing industries and low tax to GDP ratio, the sources opined.