EFFECTIVE implementation of the track-and-trace system has the potential to contribute billions of rupees to the national treasury that are currently being lost to illicit trade. But the process of implementation and installation of the system in manufacturing units across key sectors, such as sugar, cement, fertiliser and tobacco, is at best making slow progress.

This delay is attributed to a lack of interest on the part of the relevant authorities, as well as resistance by the manufacturers involved in illicit activities. There is a consensus among industry experts, legal compliance companies, and, to some extent, the government that the track-and-trace system is instrumental in widening the tax net by incorporating tax-evaders, and also represents the only long-term solution to the nation’s revenue challenges.

A recent international report on tax evasion stated that Pakistan faces significant losses (Rs956 billion) due to tax-evasion and illicit trade in key sectors. The tobacco sector alone incurs losses worth Rs240 billion due to the activities of illicit manufacturers.

Recently, the prime minister also took notice of the slow progress in the implementation of the track-and-trace system across key sectors. He instructed the relevant authorities to establish a committee to speed up the process. However, the step did not go far enough.

A sustained effort to expand our tax base is crucial. To this end, there is a need for the government to expedite the implementation of the track-and-trace system, and take decisive action against those who resist its implementation.

Usama Ghulam Rasool
Karachi

Published in Dawn, April 18th, 2024