Technology, digitisation can tackle illicit trade

Ishrat Husain says govt using NADRA, broadband penetration to chase tax evaders

LAHORE:

The challenge of illicit trade is real which can be tackled through technology and digitisation, remarked Adviser to Prime Minister on Institutional Reforms Ishrat Husain.

Speaking at a webinar titled “Combating illicit trade in Pakistan” on Thursday, the adviser talked about various researches on the size of illicit sector.

“The government has separated tax policy and administration to ensure that honest taxpayers and legitimate industries are not burdened further and tax policy does not hurt the economy,” he said.

He highlighted that the government was utilising services of National Database and Registration Authority (NADRA) and taking advantage of broadband penetration to chase tax evaders.

“Previously, 75% of mobile phones in the market were smuggled, however, with the help of technology-based solutions, we have completely eliminated them,” he said.

Speaking on the occasion, Pakistan Business Council CEO Ehsan Malik said that the common man of Pakistan was the biggest victim of illicit trade.

Appreciating Pakistan’s market, he said that despite all the hurdles, opportunities outweighed challenges in the country’s economy. “This is the reason why the growth rate of multinational corporations in Pakistan is about twice the global average,” he said.

Talking about the challenges, Malik pointed out that the most significant one was high tax rates coupled with a complicated tax collection mechanism. It gave the public a huge incentive to evade taxes and demotivated them further, he said.

He urged authorities to make the tax mechanism simpler in order to encourage people to comply with tax regulations.

“Multiple taxes are also a challenge because local, provincial and federal tax authorities collect revenue and fail to communicate with each other,” he said. “Punjab and the centre have begun rationalisation of their tax systems and other provinces are yet to follow.”

Talking about the tobacco industry, Philip Morris Pakistan Managing Director Roman Yazbeck stated that the legitimate, tax-paying and regulated industry was losing out to illicit trade with every passing year.

Experts claimed that the market share of illicit cigarettes was around 40%, which could be an underestimation, he said and pointed out that the economy lost Rs44 billion solely on account of illicit cigarettes.

“It is not just a threat to the legitimate industry but also to the economy and the state,” he added.

Published in The Express Tribune, December 11^th, 2020.

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