Taxing marketed smuggled good
In a pragmatic bid the government intends to offer a sort of amnesty to traders who sell non-duty paid goods in their shops. As per conservative estimates smuggled goods worth $10 billion reach the whole sale and retail markets of the country. In the past the anti-smuggling measures could neither bring down the quantum of these goods nor did their seizure cast any significant impact on revenue generation.
Bulk of non-duty paid goods makes their way to local markets from massive leakages of Afghan Transit trade. The imposition of reasonable amount of import duty will generate revenues to the desirable extent if irrational penalties are not imposed on the trader who sells non-duty paid goods. The sale of smuggled goods has led to the closure of local industries which produce identical products. The quality of non-duty paid foreign goods is much superior to the local brands. Consequently, the consumers develop propensity for their purchase and the slogan of preferring the local substitutes does not work.
The levy of import duty on the marketed smuggled goods provides a temporary solution to the problem of sale of non-duty paid goods as the entry of these goods will continue unabated to the tribal districts of former FATA and settled districts of PATA. Once for all remedy lies in significant quality improvement of local brands at affordable prices. In addition to inferior quality, the local substitutes are being sold at much higher prices. Naturally the consumers prefer buying high quality and inexpensive non-duty paid foreign goods. The local products need to be made competitive both in quality and price. It remains to be seen how the policy makers decide about technology improvement and reduction of cost of production of wide range of consumers’ goods.