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Operation against smuggling and Bara Markets?

  1. Budget and the IT industry
  2. Operation against Bara Markets?
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Government is fully determined to carryout proposed operation — Moin Haider

Jun 26 - Jul 02, 2000

The Finance Minister, Mr. Shaukat Aziz has strongly dispelled the impression that the government has backtracked on its earlier resolve to crack down on smuggling and Bara Markets and making the shopkeeper operating in these markets to pay tax on their stock of smuggled goods.

He disclosed that relevent laws have been finalised and may be promulgated through an ordinance by the end of this month and declared operation against Bara Markets may start in the 2nd week of July. In the meanwhile the inflow of smuggled goods in the country has dropped considerably through tightening of security measures on the borders. Earlier reacting to the report published in PAGE, issue of June 12 to 18, 2000 that "perhaps the government has dropped the idea of coming down on smuggling and bara markets as no action was taken against anyone despite the expiry of deadline of April 30" the Interior Minister Mr. Moin Haider, while talking informally to this correspondent at a social gathering, said that this perception in a section of National Press was unfounded and the government was fully determined to carryout the proposed operation against smugglers and bara markets. The operation will proceed as per agreement with traders of the bara market and their leaders and representatives regarding rate of taxation. That required some amendment in the custom laws which needed some time during which there was no visible action on this front which led people to surmise that, perhaps, the programme has been shelved. The necessary Laws have been drafted and may be promulgated in the form of an ordinance any time during the current month. This will provide the go ahead to the relevent agencies which were anxiously waiting for the green signal, the minister added.

While announcing the government decision to crack down on smuggler and bara markets in January last, the Interior Minister had admitted that goods worth over Rs.100 billion were annually being smuggled into Pakistan from different channels causing a loss of over 30 billion annually to the national exchequer. Unveiling government plans to deal with the menace of smuggling and evasion of customs and excise duty, Interior Minister said in Islamabad that the three-month deadline has been set for the payment of duty on the smuggled goods. Briefing newsmen after a meeting of the high powered committee, he said that all smuggled goods will be seized and sellers will be arrested on the expiry of the deadline. The number of bonded warehouses, which have played a key role in smuggling along with Afghan Transit Trade, will be drastically brought down to single digit from the existing 48.

The announcement was hailed by the national press and public at large as a welcome decision which bound to have a positive impact on the national economy. The National Press has, in fact, been consistently pleading with the past governments for action to regulate the bara markets, in accordance with law and rules, Smuggling has, over the decades, assumed an alarming proportion and turned out to be a parallel economy, which is depriving the country of its rightful levies including excise and customs duty worth over 100 billion rupees as per independent estimate. Thousands of industrial units have been rendered sick, due to the availability of smuggled goods in open markets. Because of successive government wilful avoidance to curb the menace despite tall claims, mushroom bara markets have sprung up almost in every major city and tows, stuffed with smuggled goods including cloth, crockery, electronic gadgets etc. Ironically, a variety of the Indian goods is also on display in these bara markets. At times the smuggling mafia enjoyed official patronage, which had made it so powerful and brazen that agencies, assigned the task of checking the smuggling were virtually crippled.

The banes that the dirty trade of smuggling has been inoculating in the veins of the society in different ways and forms are immeasurable. Besides depriving the national exchequer of billions of rupees in revenue every year, it has badly hampered the growth of local industry and trade of indigenous products. Money makers in this trade escape customs duty, income and wealth tax and grow wealthier while the government has been getting poorer day by day. Coupled with illicit trade of narcotics and rampant corruption at almost all levels, it has been one major cause of economic ruins besides creating a parallel economy in the country.

Government in the past have been making tall claims to eradicate smuggling mafia from the country. Some of them took half hearted measure but soon succumbed to the powerful lobby of smugglers mafia.

The Interior Minister sounded strong and firm when he assured this correspondent last week, that the government will in no case yield to any pressure. He said that some delay has occurred because government wanted to give some legal cover to the taxation arrangements agreed between the government and the traders representative. By now the Law Ministry has finalised the draft law for the imposition of shutter tax on bara markets with the consultation of Interior Ministry and the Central Board of Revenue (CBR).

The law is based on an agreement reached between the Interior Minister and Bara traders last month to impose 'shutter tax' on smuggled items. According to official sources, the law will be enforced through a Presidential Ordinance by the end of the current month after approval by the cabinet. The officials of Law and Justice Division, Interior Ministry and the Central Board of Revenue held a series of meetings to give legal cover to the agreement reached between the Interior Minister and bara traders, sources said.

After negotiations with bara representatives it was decided to introduce the scheme of a fixed shutter tax on all shops dealing in smuggled goods, in lieu of customs duty. According to the scheme, bara traders will have to pay a fixed tax of Rs. 10,000 on small cabins, Rs.15,000 on a single shutter, Rs.40,000 on two shutters and Rs.20,000 for every additional shutter,

However, when the proposal was presented to the anti-smuggling committee of the federal cabinet, the body called for expert comments by the Central Board of Revenue (CBR), which had raised legal objections on the agreement. The CBR had pointed out to the Interior Ministry that shutter tax instead of customs duty on smuggled items was not permissible under the Customs Act 1969.

The CBR also pointed out that two categories of goods in the market did not fall into the description of smuggled goods. One, goods manufactured locally which are sold as foreign goods. Two, goods imported under reduced customs duties. Since the outlets for all the categories of goods are the same, the shutter tax on smuggled goods would also end up being imposed on non-imported stuff as well as items for which reduced duty had been paid.