KARACHI: Pakistan’s tax agency is expecting to collect up to Rs6 billion ($37 million) a year from the installation of high-tech surveillance systems at the country's sugar mills, which have long been accused of underreporting production, the Federal Board of Revenue (FBR) said on Friday.
A government investigation report made public in May found that sugar mill owners had made a windfall profit of over Rs100 billion rupees through acting as cartels, fudging the production cost to claim subsidies, underreporting their stocks and exploiting farmers.
Some 85 sugar mills are operational in Pakistan, mostly in Punjab and Sindh. Many of them belong to influential politicians and their families.
On Monday, the Economic Coordination Committee (ECC), the government's top economic body, approved Rs350 million for the installation of video analytics surveillance (VAS) systems at the mills to monitor their operations and prevent tax evasion.
"VAS is a monitoring system of production with the help of video cameras that also includes weighing sensors," FBR spokesman Syed Nadeem Hussain Rizvi told Arab News.
"(It) is expected to generate revenue growth of approximately Rs 5 billion to Rs 6 billion."
The system is introduced under an agreement signed by the FBR and Pakistan Sugar Mills Association in October last year.
"It’s being done on fast track," Rizvi said, adding that the installation will begin as soon as the legal process for licensing and importing surveillance devices is completed.
Millers say they have been notified that monitoring will start by the next sugarcane crushing season in the autumn.
"Electronic monitoring system is expected before the start of next crushing season," Sindh Abadgar’s Sugar Mills chief executive Tara Chand Essarani said. "Since the start of the crushing season from November 2020, representatives of FBR are already deployed in most of the mills."
While the FBR is optimistic that the monitoring system will significantly contribute to state coffers, experts say that the real issues behind tax evasion are the agency's inefficient law enforcement and connivance.
"The FBR needs to improve human resources and counter tax evasion through technological intervention," Dr. Ikram ul Haq, a Lahore-based taxation expert, told Arab News.
"The tax evasion and/or avoidance is either due to inefficiency or corruption. The FBR first of all must put its own house in order."
