On Monday, Prime Minister Shehbaz Sharif ordered the sealing of non-compliant factories and demanded action against contractors failing to implement the electronic monitoring system. A committee has been set up to probe the system’s ineffectiveness, highlighting an Rs25 billion contract with a consortium that didn’t deliver results. This move underlines the government’s commitment to combating tax evasion, which is linked to loopholes within the tax system.
The PM’s Office reports that Shehbaz established a group to pinpoint failures in the monitoring system. This team is tasked with devising strategies for future automatic tax implementations in the manufacturing sector and identifying key obstacles and culprits within a week. The PM specified excluding Federal Board of Revenue (FBR) staff from this inquiry, although the FBR’s role is crucial for system support.
The immediate closure of factories resisting the system was directed following revelations of partial system operation in the sugar and cement industries, despite its success in tobacco and fertiliser areas. However, the discovery of counterfeit stamps has raised concerns. The PM critiqued the FBR for not holding the contractor accountable.
The AJCL consortium’s contract, significantly pricier than the lowest bid, resulted in an Rs8.5 billion extra expenditure over five years. An IMF-mandated condition, the system’s implementation has seen partial success across various sectors, but a court stay order now halts it.
Shehbaz called for action against illicit cigarettes and sought international support for the tracking system, emphasizing the removal of legal barriers for its broader application. He requested a digital strategy for the cement industry’s production lines.
The system has seen mixed results across sectors, with complete functionality in 14 tobacco factories and partial application in the sugar and cement industries. The FBR’s claims of revenue growth from the sugar sector post-system installation suggest potential benefits yet to be fully realized.
