The government is likely to reverse an earlier decision to bar the army-owned National Logistics Cell (NLC) from renting trucks for Afghanistan-bound goods after coming under pressure from the military – a move that may make it more difficult to eradicate smuggling.
Finance ministry sources told The Express Tribune that the military leadership was pushing for an extension to the permission granted to the NLC to sublet trucks, a facility which was never legal to begin with. A meeting between the NLC board and Finance Minister Abdul Hafeez Shaikh took place in Islamabad on Thursday to discuss the matter.
On February 25, the government had stopped the NLC from using the Hired Mechanical Transport (HMT) facility for transporting commercial cargo to Kabul after the Federal Board of Revenue (FBR) discovered that the NLC was illegally using the HMT facility since 2006. Almost 80 per cent of the hired trucks did not have a proper sealing structure, raising fears of smuggling.
Under the 1965 Afghanistan Transit Trade Agreement, Pakistan Railways has the right to transport the goods to Afghanistan. In 2005, the Economic Coordination Committee (ECC) of the Cabinet allowed the NLC to transport Afghanistan-bound commercial cargo due to capacity constraints at the Railways. In 2006, due to congestion at the ports, authorities allowed the NLC to hire the HMT only for one time. NLC, however, continued using the facility in violation of the law.
Sources say that military leaders told the finance minister that since February 25, almost 2,000 containers have been stuck at ports and needed to be cleared to avoid congestion. The government may allow the NLC to use the hired trucks temporarily and later on may get the economic coordination committee of the cabinet to legalise the business. Military representatives and the finance minister may meet again to finalise the agreement.
The FBR, however, may not be quite so willing to let the NLC continue its current practise. An FBR official told The Express Tribune that tax authorities would not backtrack from their opposition to the NLC continuing to use the HMT facility.
“The maximum concession the FBR can give to the NLC is to allow it to hire customs-bonded carriers for delivering Afghanistan-bound goods,” he added.
The FBR estimates that over $2 billion worth of goods are smuggled under the guise of the Afghan transit trade, creating an estimated revenue loss of Rs21.5 billion ($250 million), more than what the government is expecting to collect from the 15 per cent flood surcharge.
Other government officials who attended the meeting, however, disagreed with the FBR’s position. One official said that the government should not choke off supply lines by making smuggling an excuse. The FBR will have to improve its enforcement instead of denying a facility, he added.
Published in The Express Tribune, March 18th, 2011.
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