Tea smuggling via ATT costs exchequer Rs 12 billion annually
October 18, 2012: The documented sector has lost around 60 percent of the domestic black tea market to smugglers that bring it in Pakistan through the Afghan Transit Trade, causing the exchequer an annual loss of Rs 12 billion in import levies. One wonders why such a huge quantity of black tea through ATT is allowed when the population of Afghanistan is hardly 25 million.
Perhaps the government had also kept in mind to provide relief in prices which starts from July 22 this year. Customs duty was proposed to be reduced to 30 from 35 per cent. This would help reduce prices of numerous food items. The wholesale market did not witness any sharp rise in essentials’ prices ahead of the budget as traders said attendance of retailers was poor and demand thin. Besides improved supplies from areas of production and steady imports kept the prices unchanged.
However, there was a nominal hike in sugar price. They said there was confusion in the market as the government was reported to have removed the eight per cent federal excise duty on sugar but it was not clear whether the 16 per cent sales tax had been imposed on local sales.
Increase in sales tax to 16 per cent would certainly make sugar costlier by Rs 4-5 per kg. Tea packers and blenders said though the government has reduced general sales tax on imports but total impact of the government’s traders friendly decision could not be shifted due to which the prices of the commodity are still high. They said that the major share of total tea consumption is being smuggled from Afghanistan through Afghan Transit Trade.