Reforming the Customs Department


Syed Fawad Ali Shah
Pakistan Customs service is an attached department of the Federal Board of Rev
enue 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 the 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 taxpayer to save tax to be levied at rate of thirty per cent.
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.
—The writer is a Pakistani journalist currently based in Malaysia.

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