PRIME Minister Shehbaz Sharif on Monday directed sealing of factories that are resisting the electronic monitoring of their production and sales lines, while seeking an action against the private contractors that could not effectively install the monitoring systems. He has also set up a committee to investigate the reasons behind the track and trace system’s failure, despite awarding an estimated Rs.25 billion contract to a consortium. Its mandate includes submitting proposals for the implementation of an automatic tax system in factories and industries in the future as well as identification of obstacles and those responsible for shortcomings in the track and trace system.
Elsewhere in the world, the track and trace system was introduced way back in the early 1900s when mechanical systems emerged for inventory management but the advent of information technology brought about a revolution to the benefits of both the governments and the factories by way of ensuring product safety, compliance and supply chain integrity. These systems ensure compliance by enabling authorities to track the entire supply chain, identify tax evasion and implement effective tax collection mechanisms. In Pakistan, a decision was taken by the coalition government on recommendation of the IMF and a huge amount was allocated for the purpose but the statement of the PM House reveals the monitoring system could not be introduced effectively due to non-cooperation of authorities and industries concerned as it has the potential to plug tax leakage and corrupt practices. However, the direction of the Prime Minister to the newly set up committee to report back on the issue within seven days is reflective of his determination to remove all the hurdles in the way of its implementation, punish the culprits hindering the process, blacklist firms concerned and expand the implementation process to include more industries. Resistance and non-compliance by industries is a firm proof of their tax evasion and strong action is warranted against them as they add tax to the consumer price but digest the tax money themselves. It is also intriguing that the fertilizer industry is successfully implementing the track and trace system but tobacco, cement and sugar industries are reluctant to do so, which speaks volumes about wilful tax evasion. There are also reports about lack of capacity on the part of the FBR to analyze the data and its proper utilization, an issue that needs urgent attention of the Ministry of Finance and FBR leadership.
