Smuggling causing colossal losses to exchequer
The Federation of Pakistan Chamber of Commerce and Industry’s United Business Group (UBG) on Thursday urged the government to curb smuggling and illicit trade immediately to protect the organised industry and consumers from its impact.
Talking to a delegation of industrialists and traders, led by Chaudhary Ghulam Mujtaba Managing Director for Vital Tea, UBG Chairman Shahzad Ali Malik said, “Every country in the world is grappling with the issue of a parallel economy and Pakistan is not caught in the middle of this scenario all alone.”
Elaborating that the shadow or informal economy refers to the economic activities taking place outside the tax and regulatory system with bleak linkages with the organised sector, he said, “There is no right way of accurately measuring the undocumented part of an economy. Hence, the size of Pakistan’s shadow economy is estimated to be in the range of 30-50% of the nation’s total reported Gross Domestic Product (GDP) by various studies using different methodologies.”
“The problem with Pakistan is that the size of the unreported economy has grown so much that it is now bearing down on the formal sectors, penalising taxpayers, undermining tax collection, intensifying market distortions and is creating an uneven field for organised businesses,” lamented Malik.
He explained that, “The existence of unregulated economic activities across every segment of business underscores the poor level of governance, weak tax administration, corruption and a lack of political will to take action against the handlers of these underground activities.”
The Vital Tea MD highlighted that the size of the unregulated economy is not the only issue plaguing Pakistan at the moment.
“The black economy, smuggled and counterfeit products are now taking a bigger market slice from the organised sector. The government is also losing large revenues through uncollected taxes that could have been used to build economic infrastructure to boost productivity and generate job opportunities,” said Mujtaba.
Published in The Express Tribune, November 18th, 2022.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.