Tea smuggling causes PKR 14 billion loss to Pakistan government

Pakistan Tea Association (PTA) has raised serious concerns over the alarming decline in legal tea imports, which is causing a significant drain on government revenue.

Over the past eight months alone, illegal channels have diverted approximately 29.67 million kilograms of tea, resulting in a staggering loss of PKR 13.84 billion ($49 million) to the national exchequer.

The PTA has highlighted the growing issue of tea smuggling and the misuse of dry port facilities, which are contributing to the decline in legal imports.

The association has called for immediate government intervention to curb these illegal activities and restore the integrity of the tea trade in Pakistan.

Tea importers have proposed to streamline tea imports, restricting the quantity of tea imported under the FATA/PATA region to 4.0 million kilograms in line with the population of 4.0 million people in these areas, and implementing smart measures to stop the misuse of dry port facilities.

Additionally, the PTA has sought authority to conduct quantitative and qualitative checks on tea imports.

The association has also called for the immediate cessation of the Export Facilitation Scheme (EFS) for re-exporting tea, which it claims is being misused.

The PTA projects that with these measures in place, tea imports could rise to 300 million kilograms. This increase is expected to generate substantial revenue for the government to the tune of PKR 110 billion compared to PKR 68 billion earned last fiscal from 245 million kilograms of tea imports.

Tea importers have also recommended rationalizing the tariff structure to eliminate revenue leakage.

The proposed changes include reducing customs duty from 11% to 5%, regulatory duty from 2% to 0%, sales tax from 16% to 10%, and withholding tax (WHT) from 5.50% to 2%.

The PTA has urged the government to take swift action to implement these measures, emphasizing that the current situation poses a significant threat to the country's economy.

The association believes that these steps will not only curb illegal tea trade but also ensure a fair and transparent tea market in Pakistan.

According to Bureau of Statistics, Pakistan imported tea worth $364.6 million in the first seven months of the current fiscal year, down from $391.4 million in the same period last year.