He criticised the government for ignoring the smuggling of tea, which is one of the top smuggled items under the Afghan Transit Trade (ATT) agreement.
“We are hurt, the government did not bother to even discuss the issue in the federal budget,” an angry Khawaja told The Express Tribune, adding “the government had assured us that it would take measures to stop smuggling under the ATT.”
The increase in taxes like income tax from four to five per cent and sales tax from 16 to 17 per cent would encourage smuggling. Furthermore, depreciation of the rupee against the dollar is also helping tea smugglers, he added.
According to the Customs website, smuggling increased phenomenally in the first 13 days of June to reach 4.8 million kilogrammes, he said.
The PTA represents 98 per cent of legal tea importers and packers, including Tapal, Unilever and Tetley, Khawaja said.
Along with tea, tyres are also smuggled in big quantities under the ATT into Pakistan.
CEO General Tyre and Rubber Company of Pakistan Ltd, Mohammad Shahid Hussain said he hopes the government would soon take positive steps.
“Though we realise the importance of a crackdown on smuggling routes, I think there is little link between the budget and curbing smuggling under the ATT,” said Hussain whose company is one of the biggest tyre producers of the country.
The Government of Pakistan has taken up the matter with the Afghan authorities and some representatives of Pakistan’s tyre industry have also visited Afghanistan, he said, adding though the Federal Board of Revenue (FBR) had raided and confiscated 20,000-25,000 tyres, it is too little to control smuggling.
“Despite all this, we recognise the efforts of FBR Chairman Sohail Ahmed and other government officials in curbing tyre smuggling,” he added.
Total annual tyre demand in Pakistan is around 5.5 million and General Tyre has the capacity to produce over two million tyres a year.
On Wednesday evening, the PTA chairman addressed a press conference, saying the government did not take concrete steps to check tea smuggling under the ATT, which is badly affecting legal imports and causing a loss of business and government revenue, reports PPI.
He said the PTA has proposed zero-rated import duty and 7.5 per cent General Sales Tax. Legal imports of tea were about 85,000 tons annually and illegal imports through the ATT were 100,000 tons, he said.
“The government is earning about Rs7.1 billion per annum in revenues from legal imports of tea. If our proposal is accepted, the revenues will increase to Rs8-8.5 billion,’’ he said.
Published in the Express Tribune, June 17th, 2010.
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