The government has been urged to curb smuggling and illicit trade of counterfeit products to protect the local industry and consumers.

Addressing a seminar on “Shadow Economy” held under the auspices of Gold Ring Economic Forum, a policy research think tank in Islamabad, Coordinator to Federal Tax Ombudsman Meher Kashif Younis said no scale is available for accurate measurement of undocumented part of an economy. He said Pakistan’s shadow economy was estimated to be in the range of 30-50% of the nation’s total reported gross domestic product (GDP) by various studies using different methodologies.

Meher explained that the shadow or informal economy refers to economic activities taking place outside the tax and regulatory system and may or may not have any backward or forward linkages with an organised sector.

“The problem with Pakistan is that the size of the unreported economy has grown so much that it is now bearing down on formal sectors, penalising taxpayers, undermining tax collection, intensifying market distortions and creating an uneven field for organised businesses,” he said.

Meher said the existence of unregulated economic activities across almost every segment of business underlines poor governance and weak tax administration. He said the size of unregulated economy was not the only problem Pakistan must deal with. He said black economy, smuggled and counterfeit products were now snatching a bigger market slice from the organised sector and fostering further growth in illicit trade at the expense of consumers and industry.

The coordinator said the government forfeits large revenues through uncollected taxes that could have been used to build economic and social infrastructure to boost productivity, generate employment opportunities and create surplus for exports. He said it was, indeed, hard to document every unregulated sector, and many informal micro and small businesses linked to organised sectors will always exist and continue to indirectly contribute to economic growth. Therefore, he said, such businesses need not be regulated vigorously, but unchecked smuggling and illicit trade must be curbed without delay to strengthen the national economy.

Credit : Independent News Pakistan-WealthPk