ISLAMABAD: The ACT Alliance on Tuesday called for an immediate, comprehensive, and across-the-board implementation of the Track and Trace System (TTS) in Pakistan as Prime Minister Muhammad Shehbaz Sharif reaffirmed commitments to stringent tax enforcement.
Despite the system’s introduction in 2019, the promises of full implementation by December 2023 have faltered, revealing a big lapse in the fiscal management strategy.
Dire State of Tax Evasion in Pakistan
The recent cabinet meeting chaired by Prime Minister Shehbaz Sharif highlighted the dire state of tax evasion and illicit trade, with the Federal Board of Revenue failing to effectively deploy TTS across vital industries such as sugar, cement, and tobacco.
The under-utilization of TTS has allowed a major portion of local manufacturers to remain unchecked, leading to substantial losses. For instance, two tobacco companies holding 42% of the market share contributed 173 billion rupees in taxes in FY 2022-23, while over forty local manufacturers, controlling a 58% share, paid a mere Rs3 billion.
Mubashir Akram, National Convenor of the ACT Alliance, expressed serious concern over TTS’s selective and inadequate enforcement. He said that without transparent and equitable tax collection and enforcing TTS on all large-scale manufacturers, the government will struggle to meet its financial targets.
This continued oversight was not only jeopardizing the fiscal health but was perpetuating cycles of deprivation and poverty among the people, he added.
In light of revelations from the PM’s address, it is evident that even essential tools like scanners have not been acquired, further hampering regulatory progress.
The stark reality is that while only 26 out of one hundred cigarette brands surveyed carried the needed tax stamps, an overwhelming majority flout regulations, contributing to an illegal trade that costs the national exchequer over 300 billion rupees annually in the tobacco sector alone.
The meeting also underlined that the TTS, a structural benchmark set by the International Monitoring Fund (IMF), has been treated more as a procedural check-box than a genuinely operationalized system. The lack of data analysis and practical application of the extensive data collected through TTS illustrated a broader enforcement and utilization problem within Pakistan’s regulatory framework.
