Illicit Trade Index: Pakistan loses Rs 3.4 trillion annually due to smuggling

Islamabad, May 2 (IANS) The menace of illicit trade is causing an annual revenue loss of Rs 3.4 trillion to Pakistan, about 30 per cent of which is due to the exploitation of the Afghan Transit Trade facility. The figures were revealed in the latest report on Illicit Trade Index where Pakistan is ranked at 101 out of 158 countries. The looting revenue loss stands over Rs 751 billion with tobacco trade alone causing loss of Rs 300 billion, every year.

The report titled 'Pakistan's Battle Against Illicit Trade: An Analysis of Challenges and Pathways to Resilience' warned that as many as five sectors are causing massive revenue losses to the national exchequer.

Launched jointly by the Police Research Institute of Market Economy (PRIME) and Transitional Alliance to Combat Illicit Trade (TRACIT), the report details how five sectors - namely tobacco; pharmaceuticals; tyres and lubricants; petrol and diesel; and tea - are causing major revenue losses to the national exchequer due to the consistent presence of illicit trade activities.

"Out of Rs 751 billion revenue losses, illicit tobacco is causing revenue loss of Rs 300 billion, pharmaceuticals Rs 60-65 billion, tyres and lubricants Rs 106 billion, petrol and diesel Rs 270 billion and tea Rs 10 billion on a per annum basis," the report states.

Pakistan ranks 101 out of 158 countries, with a composite score of 44.5, placing it below the global average of 49.9, it adds further.

The report reveals that illicit trade in Pakistan and losses incurred because of its consistent flow directly impacts the country's revenue losses, which are estimated at a massive Rs 3.4 trillion - 30 per cent of which is because of the misuse of Afghan Trade Transit facility.

"The losses estimated in the report make up to at least 26 per cent of this financial year's annual tax targets. The gravity of this issue is manifested by an estimated annual tax revenue loss of Rs 3.4 trillion on account of an estimated $123 billion informal economy," the report details.

The report warned that illicit trade poses a serious challenge to the Pakistani economy as it damages formal businesses, endangers consumer safety and erodes government revenues.

"From smuggled petroleum and counterfeit pharmaceuticals to non-tax-paid cigarettes and under-invoiced goods, illicit trade has entrenched itself across key sectors," the report maintained.

Referring to the Afghanistan Transit Trade with Pakistan, the report revealed that the estimated revenue loss due to the misuse of the Af-Pak transit trade is about Rs one trillion.

"Pakistan is also lacking in risk-based profiling systems and modern container scanning technologies," the report revealed.

"Porous borders, outdated customs infrastructure, and limited inter-agency coordination allow the unchecked movement of illicit goods," the report added.

--IANS

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