Infrastructure tax should go to Centre: DG Customs

Voices hope Pakistan, being logistics hub, will bring prosperity in South Asia

LAHORE: The federal government is responsible for the development of infrastructures such as motorways, highways and railways, therefore, infrastructure-related taxes should be collected at the federal level, said Director General of Customs Department, Karachi Dr Sarfraz Ahmad.

Speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Friday, Ahmad emphasised that the infrastructure development cess should also be collected by the centre as inter-provincial trade was a federal subject.

He expressed optimism that Pakistan, being an important logistics hub for transit trade, would undoubtedly bring prosperity to South Asia along and beyond trade routes.

He was the view that nothing better opened up an area for economic development than good transportation networks coupled with transit rules that were conducive and the ability to swiftly transport goods and people.

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The establishment of Directorate General of Transit Trade was aimed at facilitating bilateral trade between Pakistan and its neighbouring landlocked countries, thus converting Pakistan into a land bridge between South Asia and Central Asia, he pointed out.

Transit through Pakistan currently remains the only viable option for Afghanistan, and both countries have signed the transit trade agreement.

Speaking on the occasion, LCCI Vice President Mian Zahid Jawaid Ahmad affirmed the chamber's support to the government's vision of facilitating transit trade for landlocked neighbouring countries.

He stressed that arrangements for facilitation should not be misused or hamper the growth of the domestic industry.

"Misuse of Afghan transit trade through smuggling, under-invoicing and other means still remains a huge challenge, which is hampering the competitiveness of the country," he said. "This misuse can only be minimised through extensive use of technology."

He pointed out that Pakistan still lagged behind other countries in terms of swift handling of transit containers, adding the excessive physical inspection of containers caused delay and forced importers and exporters to use alternative trade routes.

He underscored the need for reducing the number of physical inspections through greater use of technology. "This will result in swift clearing of consignments and turn Pakistan competitive."

The LCCI vice president added that the China-Pakistan Economic Corridor (CPEC) provided an excellent avenue for enhancing transit trade by taking advantage of its geostrategic location.

It is worth mentioning that China, Pakistan, Kyrgyzstan and Kazakhstan are cooperating under an agreement titled Quadrilateral Agreement on Traffic in Transit (QATT), which promotes mercantile traffic in transit amongst these countries.

"We also want to know about the new arrangements made to handle the expected rise in transit trade at seaports and dry ports," he asked.

LCCI Standing Committee on National Trade and Transport Facilitation Convener Muhammad Anwar called it necessary to make improvement in transit trade because it could attract foreign exchange worth billions of dollars into the country.

He noted that transit trade brought domestic and foreign direct investment besides creating jobs in the country. "It can also lead to other countries depending on Pakistan to transport their merchandise," he added.

"Solely through logistics services in transit trade, Pakistan can earn billions of dollars."

He explained that sales tax on logistics services was 8%, hence, the government could increase tax revenue through that levy.

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Ministry of Commerce Deputy Director Shahbaz Latif pointed out that it was the responsibility of the Ministry of Communication to ensure the building of infrastructure for swift transit trade.

He added that the ministry was taking every possible measure to improve infrastructure and revealed that a legal agreement had been reached with Turkey and permits had also been exchanged in that regard.

"However due to some unknown reasons, the agreement has not been fully implemented yet," he said. "There are no hurdles or impediments from the ministry's side."

Published in The Express Tribune, December 28^th, 2019.

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