ISLAMABAD: The Pakistan Business Council (PBC) has revealed that illicit trade is costing a whopping Rs8 trillion to Pakistan each year amid dire economic circumstances, ARY News reported on Tuesday.
In a statement issued on X (formerly Twitter), the council noted that Pakistan has “one of the highest” illegal trade in Asia, amounting to $68 billion or 20% of the formal economy, which also equals a damning 85% of the tax revenue target for FY 24.
The forum warned that the existing illegal trade also has an adverse effect on the country’s economy and is also linked with criminal activities.
“Besides loss of tax revenue, illicit trade undermines the formal sector’s growth, exploits labour, operates in environmentally detrimental ways, produces and sells substandard, unsafe and sometimes life-threatening products,” it said.
It further stated that smuggling and under-invoicing also feeds off Hawala, affecting the country’s official remittances and reserves, as well as the value of the Rupee.
The PBC blamed high taxes and ineffective enforcement as the reasons behind unrestricted illicit trade, saying that the phenomenon is further allowed to exist due to a “poorly documented cash-based economy”.
The forum also criticised the fitful measures taken against illegal trade terming them as “unsustainable”.
The council called for “enduring” fundamental reforms and provided a comprehensive framework to curb illicit trade and reduce its adverse impacts on the economy.
– Develop a strong political consensus to fight informality in the economy
– Control and eliminate flow of foreign currency funding smuggling and under-invoicing.
– Create transparency of transactions by limiting the use of cash
– Broaden the tax base to include all points of sale through which illicit goods are sold
– Provincial government co-operation to prevent sale of illicit items in their jurisdictions;
– Use technology and labelling measures to make it difficult to evade;
– Minimize misuse of Afghan transit trade;
It is pertinent to mention that Pakistan is facing a severe financial crunch due to depleting foreign reserves and devaluing local currency.
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