KARACHI, May 13: Although the cut in import duty on tea from 20 to 10 per cent and advance income tax from six to two per cent in last budget has enhanced arrivals of tea through legal channel to some extent, these steps have failed to make a big impact to reduce the arrival of tea through illegal channels. Pakistanis consumed 111.70 million kg of tea during July-April 2004-2005, that arrived by paying duty and taxes as against 104.81 million kg in the same period of last fiscal, showing an increase of 6.9 million kg during the first 10 months.

Tea importers estimate that total import of tea during the current fiscal year will touch 125 million kg as against 118 million kg in last fiscal. Pakistan Tea Association (PTA) has taken up the case of tea smuggling with Central Board Revenue (CBR), saying that smuggling was still continuing.

The chairman PTA, Muhammad Altaf informed the CBR Chairman Abdullah Yousuf that illegal tea arrivals under Afghan Transit Trade during July-April 2004-2005 stands at 20 million kg from Kenya and an estimated 10 million kg has found way from other sources/origins namely India, Indonesia, Vietnam, and China, etc.

Total arrival of tea under ATT, which ultimately lands in Pakistani markets, is estimated at 40 million kg annually depriving the government of more than Rs1 billion per year.

In a letter to the chairman CBR, the PTA chairman said that total cost of legal import of tea comes to 34 per cent as against 11 per cent expenses being incurred by the smugglers who bring tea in to Pakistani markets under the cover of ATT.

He said the tendency in smuggling under ATT has picked up from December 2004 onwards. He assumed that the expenses being incurred by the smugglers have reduced.

The smuggling activity can be curbed by reducing the import duty on tea to zero from 10 per cent besides cut in sales tax from 15 to 10 per cent in the forthcoming budget can also help in eliminating the menace of smuggling, he said.

PTA has also submitted the figures of arrival of tea from Kenya under Afghan Transit Trade which include vessal name, arrival date, number of containers and quantity.

PTA has also urged the CBR that to put black tea on negative list of the ATT as tea which arrives under ATT finds its way back into Pakistan market.