ISLAMABAD: The ACT Alliance is calling for the immediate, comprehensive and widespread implementation of the Track and Trace System (TTS) as Prime Minister Muhammad Shehbaz Sharif reaffirms his commitment to strict tax enforcement,
Despite the introduction of the system in 2019, promises of full implementation by December 2023 have faltered, exposing a critical failure in our fiscal management strategy.
A recent cabinet meeting chaired by PM Sharif highlighted the dire state of tax evasion and illicit trade, with the Federal Bureau of Revenue (FBR) failing to effectively implement TTS in important industries such as cement, sugar and tobacco.
Underutilization of TTS allowed a significant portion of local producers to remain unchecked, leading to significant losses. For example, two tobacco companies, which have a 42 percent market share, contributed Rs 173 billion in taxes in the 2022-23 fiscal year, while more than 40 local manufacturers controlling a 58 percent share paid just Rs 3 billion.
Mubashir Akram, National Convenor of the ACT Alliance, expressed deep concern over the selective and inadequate enforcement of TTS. “Without fair and transparent tax collection and enforcement of TTS from all major manufacturers, the government will find it difficult to meet its financial targets,” said Akram. “This continued oversight not only threatens our fiscal health, but perpetuates cycles of deprivation and poverty among our citizens.”
In light of revelations from the Prime Minister’s speech, it is clear that even basic tools such as scanners have not been procured, further hampering regulatory progress.
The stark reality is that while only 26 of the 100 cigarette brands surveyed had the required tax stamps, the vast majority were flouting regulations, contributing to the illicit trade that costs the exchequer more than Rs 300 billion annually in the tobacco sector alone.
The meeting also highlighted that the TTS, a structural measure set by the IMF, was considered more of a procedural tick box than a truly operationalized system. The lack of data analysis and practical use of the extensive data collected through the TTS illustrates the broader problem of enforcement and use in Pakistan’s regulatory framework.
“The time for well-staged announcements without substantive action is over. We need robust, cross-industry enforcement strategies from manufacturers to retailers,” Akram added. “The potential of TTS to significantly impact Pakistan’s fiscal health remains unrealized, continuing the cycle of wasted tax collection and regulatory enforcement opportunities.”
The Prime Minister’s directive to reshuffle the FBR leadership signals a move towards accountability. However, the ACT Alliance emphasizes that ongoing monitoring is essential for these efforts to result in sustainable improvements. Solving systemic problems, strengthening operational capabilities and supporting a motivated workforce are essential to realizing the government’s fiscal goals.
With Pakistan facing significant societal challenges, with 20 million citizens homeless, over a third of the population facing food insecurity and 26.2 million children out of school, the need to recover income is more urgent than ever. Transformative changes through effective fiscal management can significantly mitigate these crises.
“Let’s prove the critics wrong and reshape Pakistan’s image from the ‘sick man of Indus’. With tireless advocacy under your leadership, Prime Minister, we can revive our nation’s potential and prosperity,” Akram concluded.
The ACT Alliance calls on the government and relevant departments to adopt a non-selective, transparent and fair approach to tax collection to secure the country’s economic future.
