Custom Act on Bara Market

Soaring oil prices Hubco/Wapda dispute Interview: Tony Tyler of Cathay Pacific Custom Act on Bara Markets Pakistan-IMF negotiations Harvest Group Revised import tariff

The decision will have a positive impact on the national economy

From SHAMIM AHMED RIZVI, Islamabad
Sep 18 - 24, 2000

The government has decided to bring the sprawling Bara Market under the purview of Custom Act instead of imposing shutter tax on their shops as earlier agreed between the representatives of Bara markets and the Ministry of Interior. The decision has reportedly been taken on the directive of the Chief Executive to bring these markets into tax net and extend the on going tax survey of business to the smuggled goods markets all over the country

The survey teams will start visiting the smuggled goods markets commonly known as Bara markets from next month, in the second round of the survey form distribution. The C.B.R. has already announced the extension of survey to 13 smaller towns of the country after completing it in 13 major cities.

Earlier, the Interior Ministry had made an agreement with the representatives of the Markets on April 30 that it would allow the smuggled goods traders to sell their existing stocks by July 31. The traders had also agreed to pay duty on leftover and future stacks of smuggled goods at fixed rate on per shutter-basis. According to the this agreement, all shopkeepers, dealing exclusively in smuggled goods anywhere in Pakistan, were to be required to pay a fixed tax of Rs.10,000 for a cabinet, Rs.15,000 for a shop with one shutter and Rs.40,000 for a shop with double shutter. Tax of Rs.20,000 per shutter was to be levied on every shop with more than two shutters. Wholesalers and composite shops like establishment dealing in both local and smuggled goods, were to be required to pay confessional duty at 25% of normal tariff on their stocks of smuggled goods.

The C.B.R. and Ministry of Finance had objected to idea of taxation on per shutter or size of shop basis. According to them it was not in according with taxation laws prevailing in the country and could lead to legal complications at a later stage. The latest decision which aims at dealing with Bara market like any other business centre nullifies the agreement between the Bara traders and the Interior Ministry. Even otherwise the agreement had cased to exist as the trader in the Bara market did not pay any tax after July 31 as agreed by them earlier with the Interior Ministry. Therefore it remained no more binding on the government to follow the accord.

As no action was taken against the Bara market after expiry of the grace period i.e. July 31, 2000 for violating the terms of agreement it was being commonly perceived that this government, like many previous government, has also back tracked on it earlier resolve to crack down on smuggling and Bara markets and bringing the shop keepers operating in these markets into tax net. The latest directive from the highest level has, however, dispelled that impression.

While announcing the government decision to crack down on smugglers 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 Rs.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 pave 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 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 governments wilful avoidance to curb the menace despite tall claims, mushroom Bara markets have sprung up almost in every major city and towns, stuffed with smuggled goods including cloth, crockery, electronic gadgets etc. Ironically, a variety of the Indian goods are also on display in these Bara markets.

The banes that the dirty trade of smuggling has been inoculated 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. Honey 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.