Pakistan Customs service is an attached department of the
Federal Board of Revenue responsible for the enforcement of Pakistan trade
policy. It is expected to levy tariff on the undesired imports, facilitate
exports and stop smuggling into and out of the country. In addition to the
above, it collects sales tax, Federal excise duty and Income tax as a
withholding agent.
In wake of the current government resolve for revamping the revenue
collection system in Pakistan; an appraisal of the customs side of the FBR
is mandatory. An attempt is therefore made to highlight some salient
features of the service in the following paragraphs.
Custom Pool:
This department has established the customs pool which is funded from the
money collected from customers over and above the transaction cost. The fund
collected is made pool fund to be used for the welfare of the employees of
the department. The question arises that if amount collected over and above
the transaction cost is coined corruption in other departments then why is
it permissible in customs department.
Appeasement function:
Unfortunately, the state of Pakistan utilizes the services of customs
department as a revenue collection agency like the Inland Revenue
department. The customs officials in order to meet the revenue targets asses
the value of assets on the higher sides due to which their value of asset
becomes high in the accounts of the corporate taxpayers by paying tax
nominal duties and taxes. The same value is used by the taxpayers for
claiming high expenses and depreciation enabling the taxpayer to save tax to
be levied at the rate of thirty percent. This policy of the government in
general and the customs department in particular is responsible for the tax
gap.
Anti-Smuggling:
This is one of the primary duties of the customs department however, very
little effort is witnessed on this account. This is primarily due to lack of
the required enforcement paraphernalia and the lack of proper strategy and
will of the movers and shakers of the department. One of its officers had to
embrace shahadat due to lack of will on the part of the department to stop
smuggling. The shops in Hayatabad markets, Nowshera, Rawalpindi, Lahore,
Quetta and Karachi are full of smuggled goods and non-custom paid vehicles
which speaks volume of the incompetence or corruption of the customs
department.
Commerce policy:
In the modern world, trade policy is framed by the Commerce department for
balance of trade and that policy is enforced through customs department in
the shape of zero rating of exports, levy of heavy duties and taxes on
unwanted imports, anti-dumping duties etc. Unfortunately, the customs
department in Pakistan is made part of the Federal Board of Revenue instead
an attached department of the commerce ministry due to which revenue is not
collected at the optimum level and negative balance of trade with all
countries.
In short, in order to achieve positive trade balance customs department
needs to be placed under the ministry of commerce and be allowed to act as a
withholding agent like other departments to collect taxes. The future of new
Pakistan lies in reforms and that reforms should include customs department
as well.