KCCI demands reduction in taxes

KARACHI:,,, President of the Karachi Chamber of Commerce and Industry (KCCI), Abdullah Zaki, has said that in order to effectively deal with the issue of smuggling and to avoid misuse of Afghan Transit Trade (ATT), the government must lower duties and taxes on various imported goods, particularly the smuggling-prone items.

In a statement issued on Tuesday, said that the menace of smuggling along with wide misuse of Afghan Transit Trade have undermined the local industry, discouraged legal imports and reduced volume of revenues collected from duties and levies at the import stage and taxes collected at the retail stage.

Expressing dissatisfaction over government’s failure to announce noteworthy reduction in duties and taxes on imported goods in federal budget 2014-15, Zaki pointed out that although the business community demanded substantial reduction in duties and taxes at import stage but unfortunately, the decision makers reduced duties on some items only and imposed an additional five percent regulatory duty on all imported items.

This regulatory duty, he added, was also applicable on items being imported from those countries with whom Pakistan had signed free trade agreements, which makes imported goods more costly and leaves no other option for the importers but to avoid legal channels and go for illegal sources including the faulty Afghan Transit Trade.

He said that it had been observed that local markets were over flooded with smuggled goods, which were terribly affecting the share of indigenous products as these smuggled goods were neither required to pay any taxes and duty nor complied with complicated documentation procedure thus rendering the legal importers and local manufacturers uncompetitive.

KCCI president was of the view that the policy of high rate of taxes and duties encouraged tax evasion while smugglers were fearlessly carrying out their activities due to lack of strict mechanism capable enough to strictly dealing with smuggling.

KCCI president also advised the authorities concerned to take appropriate fiscal and administrative measures, including sealing of borders to curtail smuggling of incoming and outgoing goods, from Afghanistan-Iran-Pakistan borders, encourage legal imports and local production and safeguard the interest of indigenous industry and legal importers.

While expressing deep concern over discretionary powers to some departments of Federal Board Revenue (FBR), Zaki said that Karachi Chamber had always opposed discretionary powers to government departments as it had been observed that such powers only open more avenues of corruption. These tactics to disturb the business community along with poor law and order situation, dilapidated infrastructure and high cost of doing business are causing flight of capital from the country as businessmen and industrialists are now finding it almost impossible to run their businesses in extremely dire circumstances, he added.

He said that Karachi Chamber would always support raids against smugglers and oppose any action taken under the discretionary powers against genuine importers. Prior to conducting raid of godowns in any area of the city, the respective trade association should be taken on board to ensure that the entire raid is carried out in a transparent manner, he advised.

He urged Federal Finance Minister Ishaq Dar that instead of high rate of taxes and duties at import stage, the government must devise a clear strategy on bringing these duties down with a view to encourage legal imports and implement a clear mechanism which should deal with smugglers, particularly those responsible for misusing the controversial Afghan Transit Trade.

“We, the business community, are against smugglers and are ready to extend full support to the government in eradicating smuggling from the society,” he said.

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